Updated: May 4
Spring is officially here and the tax deadline will soon be in our rearview mirror. No matter if your taxes have been done for weeks or you are still working to beat the deadline, now is the perfect time to start spring cleaning your finances. By following these five tips you can be well on your way to adding money back into your bank account in 2016.
Look for recurring debts
Each year it seems like most of us are always signing up for at least one subscription based service. As the first step in your spring cleaning process, login to your bank account and browse through your statement. Do you see any recurring expenses that you no longer have a need for? If you do, then make sure you cancel them because that is money right back in your pocket.
Review your insurance policies
It’s pretty common that once we take out an insurance policy we forget all about it. The money is drafted from our account each month and nothing else happens. The problem with this is that there is a lot of competition within the insurance industry. Companies are fighting for customers and you never know when you might be able to receive the same level of coverage for a lower monthly premium. Use this time to price shop the competition and see if you can get a lower rate somewhere else.
Contribute to an IRA
Will you be receiving a tax refund this year? If you are, then this is a great opportunity to fund an IRA. The contribution limits for this year are $5,500 ($6,500 for anyone 50 years or older). Don’t forget that any contribution you make is tax deductible on your 2016 taxes.
Knock out your debt
If you have found yourself struggling with debt, then now is the perfect time to start working towards eliminating it. If you need a little help getting started with the process, take a look at The Avalanche Method. With this you will prioritize your debts by their interest rate. Start by paying off the debt that has the highest rate and then move on to the next highest debt until you are debt free.
Another popular method is The Snowball Method, where you will start with the debt with the lowest balance and move on to the next highest balance until everything is paid off.
Start your tax planning for 2016
Don’t wait until the end of the year to start planning for next year’s taxes. If you are a company driver that receives a W-2 make sure that your W-4 form is up to date. If you get married or have kids then your allowances will have changed. This is also a good time to start making charitable donations, which will help lower your taxable income.
The bottom line
Spring is not just a good time to clean out your truck and house, it’s also a great time to start going over your finances. By following these five tips you will be well on your way to a more fiscally responsible you in 2016. Image Source - https://www.flickr.com/photos/meddygarnet/