7 ways to make tax season the financial refresh you know you need
Although taxes aren’t due until April, it’s a good idea to start thinking about them right now as the new year starts. Because it’s not just about filing your return on time. If you work it right, this tax season can be the financial refresh you know you need. There are tons of superwomen out there who are up on their finances all the time and have an admirable handle on what’s coming in, what’s going out, and how they’re saving for the future. And then there’s the rest of us.
If you feel like you don’t have control of your finances, you’re definitely not alone. Over 80 percent of people don’t feel like they’re saving enough money as a general habit and have absolutely no idea how much they’ll need to retire. A lot of that is because we so often psych ourselves out when it comes to money — we don’t feel like we make enough, we have too much debt, and then a crushing, paralyzing anxiety takes over when it comes to looking at our bills and handling it. Well, enough of that.
The best way to ease your financial anxiety is to make a plan, so why not take advantage of tax season to get one together? An added bonus: Having your financial act together is crazy empowering. It’s likely that once you give yourself a financial refresh, other things will also start to fall into place.
1Hire a professional.
Sometimes, the best thing to do when you’re confronted with a problem is to ask for help. When it comes to filing your taxes, the whole scary thing can actually be pretty straightforward for most single people with a W2. But if you’re a freelancer, self-employed, own property, or have kids, those are all situations that totally justify getting an accountant to file your taxes for you.
Yes, paying someone to do your taxes might seem over the top (hey, you’re a smart person, right?), but you’ll be surprised at how much it evens out when they start saving you money on your tax bill or getting you an even bigger refund. You can often give them power of attorney for just your tax stuff, so they can call the IRS for you and handle all of your business. Most times, you can ask them for a sliding scale of their rates or to pay in installments to make it easier on your checking account, too.
If you need general financial planning, there are people who do that, too. Most local cities and towns have places where you can get free financial help or tax support, like at the library or through non-profits. If finding one gets too hard, check out a credit union in your town. Most of them have free financial counselors for members. You can open a savings account, throw $10 bucks in it, and then take advantage of the membership perks. Up to you if you want to keep saving with them.
2Actually file your taxes!
If you have secretly not been doing your taxes, then you definitely need to get an accountant and make it happen this year. Although it’s unlikely that the IRS is going to come for you in the cover of night, you do not want to realize one day that you owe thousands of dollars in back taxes and penalties for being years late. The repercussions are major — like garnishing wages, or freezing your accounts when you’re least expecting it.
The New York Times reports that even people on the up and up don’t file (let alone pay) their taxes, so if you’ve slacked in the past, you’re not alone. The idea of doing them can seem like too big of a project, and sometimes, it is. But knowing for sure exactly what you owe and when will be a weight off of your shoulders.
3Dig into your debt.
Once you have all of your tax documents in order, it might be as good a time as any to figure out your debt. Whether its student loans or credit cards, dealing with debt is not easy. If you have a lot of debt, you might want to get help for this, too, and see what your options are when it comes to consolidating what you owe or getting the interest rates lowered. This is important, and not just for your credit score, but for your budget. Making your monthly payments lower, even just by starting to make regular payments, will mean you have more money to work with.
If you have federal student loans, you can call StudentLoans.gov and talk to someone about your situation, but most private loan providers also have support staff to walk you through things. It’s a project that will almost definitely entail many minutes of being on hold, so set aside a day just to make calls and do some math. It might not be the best day you have this year, but it’s just one day, and it might end up being one of the most beneficial.
4Find ways to make more money.
We always tell ourselves that we don’t have enough cash and need to cut back on spending. And while that’s often necessary, why not also try to make more money? It’s not easy to do and you don’t need to get a fifth job and work yourself into the ground. However, the start of a new year can be a great time to ask your boss for a raise. If it looks like its not going to happen, maybe you should apply for a new one that has a bigger salary. If you work for yourself, up your rates a little bit (seriously, most clients will accept the bump) or figure out a way to prioritize the work that pays the most. Get what you deserve.
5Make a budget.
Now that you know what you what owe, whether it’s credit card debt or tax bills, you can make a proper budget. Don’t just say you’re going to “spend less,” either. Actually make a list of what you make and what you spend. Figure out what’s important to you — you don’t have to stop shopping or eating out altogether, but you should know how much per month you can spend at Sephora and Seamless and not go over that limit.
6And a savings goal.
When you make your budget, you should definitely remember to not just use all of your monthly income for fun. You want to keep some of it. Set a savings goal that’s going to work for you — really, even if it’s just $5 a week — and put it into a separate account. Having a stash of money to dip into for emergencies or a summer vacation feels so, so good. You’re never earning too little to start saving something.
Please don’t do all of this in one day. You’ll only overwhelm yourself, especially if you’re already totally anxious and stressed about money. Start with handling your taxes this year, since there’s a deadline for that. Then, slowly pick away at your problem areas, whether its debt or budgeting. Taking on too much at once will invite frustration and this is supposed to be an empowering activity. Be nice to yourself. And really, don’t forget to ask for help when you need it.