how to manage finances and taxes?
My dad has been on my back lately about getting a job so i finally got one- im eighteen. about to start wed. I always see him “doing his finances and taxes” and he says that i need to start doing them now that i have a job. problem is a dont know how. As im starting this new job, what should i be doing to “manage my money and taxes”?
Welcome to the working world. When you start at work, they should have you fill out a Form W-4 which is your declaration of how much tax you want withheld. You will likely be close if you just put down Single and 1 exemption. You can go to http://www.paycheckcity.com to run what your paychecks will look like.
There are a lot of papers you will need for your tax return next year. Some people like to have an elaborate filing system. A big envelope can work as well. It depends on how detail oriented you are. If you tend to lose papers (I’m a CPA and I have problems with my personal papers.) get a sheet fed scanner to scan things. You need to keep anything that has to do with taxes paid, contributions to charity, and your bank statements.
Next up is your finances. Try to estimate how much you will spend each month on rent (if any), clothes, out with friends, and how much you need to set aside for car insurance and other bills that come in only every few months. By setting aside money now to pay a bill in October will lessen the odds that you have to ask your parents for money.
If you have money left over before a paycheck, put the money in savings. Your savings account is how you should pay for a vacation. That is, don’t pay for a vacation by using a credit card. You should also build up the money to buy a car when your current one collapses, or to buy a condo or house.
Once you get a better feel for how much you spend compared to how much you make, you might be able to have your pay check split in a direct deposit with a little going straight to a savings account (ING Direct http://www.ingdirect.com and Charles Schwab http://www.schwabbank.com/ pay a higher rate of interest than most local banks.
Don’t be afraid to ask your father for help. It would likely impress him if you ask specific questions like “How much do you think I should set aside for car insurance?” instead of just saying you don’t know what to do. (It might be good to ask him for help every now and then even if you don’t need just so he can feel good.)
Quicken software can keep your checkbook balanced and if you enter payments ahead of when they are due, you can see if you need to transfer money from savings before you bounce a check. See if your bank offers online checking. (Both Schwab & ING do). You can enter your bills to be paid in advance. That way, you’re less likely to forget to pay a credit card bill or cell phone bill and pay late fees or have service cut off.
I hope this helps.
How to Open ING DIRECT Savings Account