Some basic financial information. Please note that nothing written here is to be considered tax advice or authoritative. I am only writing based on what applies to me and my own financial circumstances. Before following anything financial written here, you should consult with tax professional or CPA.
It’s easy to think that taking charge of finances is really tough & confusing. It really doesn’t take a lot of my time & I don’t try to understand every detail. It is like operating a car – I don’t need to understand the mechanics, I just need to know how to drive and how to do basic maintenance.
Especially considering the current flavor of the economy, working in Accounting is tough & can be extremely stressful, not to mention how the cost of living seems to be increasing! Through the power of Visualization, I’ve been using techniques to diffuse stress & not let it affect my home life. To help combat stress, I will visualize that I’m doing something fun. Sounds kind of basic, but it helps me not get stressed out. Dr. Kim talk about visualization in Seven Steps to Inner Power and depending on what I am going through, it helps me combat many different things that I encounter.
See what your company offers for benefits. Deductions for medical, dental and vision insurance should be pre-tax on your paycheck. This means that the amounts you pay for these benefits are deducted from your salary *before* taxes are calculated. This reduces your taxable income, and it means that you pay less taxes. So, if you earn (gross pay) $1,000, you pay taxes on that $1,000. If you have a pre-tax deduction, say $150, your taxable income is now only $850 – you pay taxes based on $850, not $1,000! Make sense?
I’m pretty lucky since the company I work for pays 100% of the employee only benefits, which means there is no out of pocket expenses for me for this. Very nice. While most companies don’t cover 100% of benefits, consider the tax savings that you don’t have to pay when deciding on what benefits you enroll in.
Future posts will discuss 401k plans, Flexible Savings Accounts, Tax withholdings (W-4 form) and Credit Card Debt.