Sarang Ahuja | Finance

Leader, Financial Expert, Game Changer

Category: Uncategorized

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Tax Season Tips

With tax season here, hopefully you’re not sporadically running around looking for your tax returns, receipts, and other important documents. Hopefully, you have also decided how you will be filing your taxes this year. But if not, have no fear! You still have two months left to file your taxes and most people haven’t even started yet. By following these tips you’ll be able to get organized and ready to file your state, local and federal taxes, but also take these tips to help you become organized for the rest of this year so that you have a smooth tax season next year.

Receipts

One of the most important things to do during tax season, (which sadly most people forget to do) is to save and organize your receipts. The reason for this is because if and when you get audited you have to have proof that you made that purchase (since you are filing it for a return). Many people questions if they should really be saving all of their receipts, however saving all of your receipts will give you an accurate estimate on how much money you spend on categories such as food, entertainment, shopping, etc. Saving your receipts will also allow you to become more organized and when tax season comes around, you’ll know exactly what you can and cannot claim.

Documents

As you already know, you’ll need some important documents to file your taxes. It is your employer’s responsibility to send out your w-2 or 1099 form. (If you are self employed, you should have a 1040 or 1099 form). It’s important not to lose these forms, however, some payroll and employer services have these forms on file. You will also need identification and your social security number. Along with these, you will need to bring along any documents or forms that were received from any stocks, investments or bank accounts that you will receive. Be sure to stay organized and keep everything together.

DIY or HIRE?

Another step you’ll need to consider is how do you want to file your taxes. It may be easier to hire someone, but it could also be costly. If you make over $200,000 a year, it is recommended that you hire an accountant to do your taxes for you as they will ensure that the least amount of mistakes are made. If you didn’t make much money, are not a homeowner or a business owner, and can’t claim anyone but yourself, filing your taxes via DIY may be the way to go. For one, you will usually find out how much your return will be right away. You can also do these at home with the click of a button so it saves you time and money. However, you do take the risk of making a mistake. Again, it’s always best if you can have professional advice to help you decide which way is best for you to file.

 

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Achieving Financial Success This Year

As the New Year is finally here, many are taking on New Year’s resolutions. However, come a week after new years, followed by months of setting your goals aside, we end up in the same position as last year, with our goals being dusted away and forgotten The new year has always been known for starting a new chapter in our lives, therefore it’s a great time to write down a list of goals to commit to. Here are five ways to actually reach and commit to your financial goals.

Commit to the Envelope Method

Let’s go back to a time before online banking and smart technology. One of the most successful savings methods used was the envelope method. Today, this method can be applied on your smartphone or tablet, or the old fashioned way. The concept is to create different envelopes for your spending habits so that you don’t go over your spending budget. This is a successful method as you are able to see how much money you have (or don’t have) to spend. It works great with paper envelopes, or you can organize your bank account through various online envelopes.  Creating this habit will allow you to stay committed to your goals.

 

Cook for 30 days straight

You hear me right. January is a great time to save money. First of all, who wants to go out in the middle of winter? Secondly, what better time to detox all the sugary baked sweets and holiday treats from the holiday than January? Begin by establishing a meal plan for 30 days straight, then head to the grocery store, and buy only the items you’ll need for your meals/ snacks. If you typically eat out, this will detox your mind and body and allow you to save money and make healthy meal choices. After 30 days, you won’t have the urge to go out to eat every day, as you’ve spent time learning how to cook and see how much money you’ve saved.

 

Make coffee at home

Cooking at home for 30 days straight, includes making coffee at home. The average cup of coffee costs about $2.70. This means an average of $18.90 per week or $907.20 per year. That’s enough to buy you a weekend getaway. Investing in a nice coffee pot and large, quality coffee mug will still save you money throughout the year just buy discontinuing those coffee runs.

 

Focus on quantity, not quality

The idea here is that less is more.The higher quality clothing, household products or items you buy, the the longer it will last, and the less amount of money you’ll spend fixing these items or spending money on replacements. This is a good thing to keep in mind when buying clothing or furniture especially. Once you purchase high quality products, you won’t have the need to buy more until you absolutely need it, hence, saving you money.

 

The Worst Things to Spend Your Money On

man holding money

We live in a society where it is almost impossible to get by without spending money. We are so consumed in our work and spending power, that we don’t even notice why we make the spending decisions that we do. There are many things that we can’t get away from spending money on such as street parking, taxes, and health insurance. However, there are many things that you can avoid spending money on and avoid unnecessary purchases. Here are the worst things that consumers spend money on, and ways to save.

 

Buying Brand Names

One of the biggest things consumers tend to care greatly of is brand names. Many people have committed relationships with brand names and items, while others find that brand name and generic items don’t have much of a difference. Brand name items such as clothing, toiletries, and food can cost a lot more money compared to generic items, hence one of the ways people get away with spending half as much as others on groceries. The biggest difference in generic items and brand name items is simply the name of the company, where the ingredients tend to be the same. Buying generic can save you thousands of dollars when shopping. Try it out sometime and see if you can tell the difference!

 

Coffee & Water

You knew it was coming! Spending money on coffee can equal out to over $1000 a year! And don’t even get me started on water bottles, especially if you buy them individually. Consumers tend to spend thousands of dollars a year on the convenience of buying coffee and water. If you were looking to save money, investing in a coffee pot and water filter would be your way to go. If you still can’t give up your morning coffee ritual, at least bring your own coffee mug. Some cafes give you a discount for using your own cup, plus it’s better for the environment.

ATM FEES

One of the most inconvenient places to spend your money, right? Although it’s important to carry cash around, heading to the nearest ATM won’t help you save money. ATMs can charge consumers anywhere between $2-$5 for taking out cash, adding up to hundreds of dollars a year if you’re an advocate visitor. Instead, taking some extra time to visit your regular bank on a weekly or monthly basis may help you save money. You can also visit your bank’s ATMs where you won’t be charged.

 

Online shopping

In today’s society, time is spent in a completely different way. A big reason for this is the advancement of the internet, which allows us to save time on things such as shopping. However, this also means spending more money. For one, monthly uses of the internet can become costly, depending on your plan. Although online shopping may be much more convenient than running to the store and purchasing your items, the costs of shipping and handling can become expensive. There are only a few sites that offer free shipping, whereas others require a yearly subscription (amazon) or shipping fees for each item. Unless you live miles and miles away from a shopping mall, convenience store, or grocery store, you’ll save a lot more money that you can use towards shopping if you don’t do it online on a regular basis.

Top 5 Finance Books To Read Before You Turn 30

reading book

Becoming financially successful typically cannot be done overnight. It takes a lot of time, practice and decision making to reach the ultimate peak. However, you don’t have to wait until your retirement to live financially free. One of the best things an individual can do to practice financial success is to read. Although it doesn’t sound like much, reading can help expand the mind of individuals and fill your brain with the confidence and power for strong decision making, problem solving, and analytical thinking. Here are 5 books you should read before turning 30, to get on the road to a financially free life.

 

Thinking Fast and Slow by Daniel Kahneman

As previously mentioned, decision making is a very important aspect of finance. Kahneman talks in detail about the two different types of thinking that drag our minds into making decisions, allowing us to understand the reasons behind why and how we make important, life decisions. This book will allow open your mind up in the way that we think and allow you to make choices in a way you never have before.

 

Debt-Free By 30 by Jason Anthony and Karl Kluck

As many people are burdened with debt, they also tend to think that there is no way out. However, Debt-Free by 30 offers resources, tools, and advice by two young men who have reached their peak debt point. The authors were living for and under control of their debt, when they decided it was time to get their lives back. Anyone who’s ever felt like they will never get their life back should consider reading this book and becoming prepared for the challenges that life can take us by. There is a way out.

 

The Money Book for the Young, Fabulous & Broke by Suze Orman

As many young people graduate high school and college and look for the next step in their lives, it is no surprise that millennials don’t know where to begin their financial journey. This book is a step by step guide in understanding your finances straight out of school. It even includes financial vocabulary to help reader gain a thorough understanding of finances in life. Schools typically don’t teach finances in today’s world, so whether you’re looking to buy a house, get out of debt, or come up with a financial plan, this book is a must read.

The Millionaire Next Door by, Thomas J. Stanley and William D. Danko

Many people believe in order to become a millionaire, one must be born into money. However, this book will help you understand why this concept is a myth and what it really takes to become a millionaire. Through hard work, dedication, and financial planning, you can be on your road to financial success.

 

The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money by Carl Richards

We live in a society where buying things for satisfaction controls our financial decisions and spending habits. Richards explains in detail the theory of “the behavior gap” for consumers to understand their reality and have the ability to change their train of financial thought.

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Post-College Financing

For those of you out there who have just finished another chapter of your life and graduated college, congratulations! You’re ready to take on life choices and decisions and you’ve officially entered adulthood. This means that you’re on the road to finding financial success and will most likely begin paying off your loans from the last four years. Although it can be a hard subject to think about, taking control of your finances post college life is attainable. By following these four steps, you can be on your way for financial success.

 

Calculate your Debt

As hard as it may be to think about how much money you don’t have, knowing how much you owe is crucial to come up with a plan to paying back your loans. Once you have established a number, write it down. This will allow you to keep track of your payback progress. When making monthly payments, it’s also a good idea to set up automatic payments. Automatic payments will ensure that your payments are always on time and establish a positive credit score and a good relationship with your bank.

 

Keep an Eye on your Credit Score

College is about learning from your mistakes, right? As soon as you get out of college ( or even before), you should keep an eye on your credit score. Whether you’ve applied for loans/ credit cards or not, monitoring your score will help protect you from fraud and identity theft. It’s also important to keep in mind that checking your credit report too often can actually hurt your score. If you’re planning on taking out a mortgage or big loan this year, keep the credit pulling to a minimum, such as 3 times a year. However, checking your monthly FICO score is a great idea to have an idea where your credit stands. FICO works by predicting what your actual score is. It’s usually offered with online credit card statements, therefore you can look at it as much as you’d like without worrying about your score going down.

 

Emergency Savings

Although setting up a 401k and retirement is important as a post college student, it’s more important to have an emergency savings account set up as soon as you can. If you come out of college with a job lined up, consider yourself lucky. Otherwise, you’ll need to set up a plan for living costs, such as moving back in with your parents or finding freelance work. When your income isn’t steady, an emergency living plan is more important than setting up a retirement plan. The reality is that you went to college to find a job, so eventually you will find one. But some unexpected costs may come up, such as car damages, shopping for interview clothes, or other emergencies could potentially come up, so you have to be ready.

 

Create a Budget

My best overall advice for college graduates, is to start thinking about your future monthly expenses before you graduate so that you’re not shocked when it comes to paying your bills post college. Then, create a budget to keep in mind. This will also help you in the long run when you make more money than you’re spending, allowing you to create savings plans.

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