Budget Check Up: Tax Time Is the Right Time
Every year, households file their federal tax returns. For many, the process involves digging through receipts; gathering statements; and relying on software to take advantage of every tax break available. Why not to make the most of all that effort?
Tax preparation may be the only time of year many households gather all their financial information in one place. That makes it a perfect time to give the household
budget a checkup.
A thorough budget checkup involves six steps.
1. Creating Categories. Start by dividing expenses into categories and subcategories. Some examples: Housing, Food, Clothing, Charity, etc. Don't forget to add in your savings and investments.
2. Following the Money. Go through all the receipts and statements gathered to prepare taxes and get a better understanding of where the money went last year.
3. Projecting Expenses Forward. Knowing how much was spent per category can provide a template for future expenses. The results of this projection will form the basis of a budget for the coming year.
4. Determining Expected Income. Add together all sources of income. Make sure to use net income.
5. Doing the Math. It's time for the moment of truth. Subtract projected expenses from expected income. If expenses exceed income, it may be necessary to consider changes. Prioritize categories and look to reduce those with the lowest importance until the budget is balanced.
6. Sticking to It. If it's not in the budget, don't spend it. If it's an emergency, make adjustments elsewhere.
In taking control of your money, you may find you are able to devote more of it to the pursuit of your financial goals.
Cornerstone Wealth Management
486 NE 2nd Ave.
Canby, OR 97013
Securities and advisory services offered through LPL
Financial, a registered investment advisor. Member
The opinions voiced in this material are for general
information only and are not intended to provide
specific advice or recommendations for any individual.
Rebalancing a portfolio may cause investors to incur
tax liabilities and/or transaction costs and does not
assure a profit or protect against a loss.