Four Tips for Tax Season

So I haven’t read each comment here, but I’m surprised that no one is talking about how huge refunds *aren’t* great; it just means that you are giving the government an interest-free loan because a refund isn’t the government’s money, it’s yours! So it’s actually better to keep your money as much as you can throughout the year – and make good use of it by paying down any debts, saving, or investing – and have as close to a zero refund as possible!

Think of all the things that you could do with that money throughout the course of the year (pay off your student loans! invest it for a higher return than the 0% you’re getting by loaning it to the government! buy that gorgeous bag you’ve been coveting!) instead of losing it each month because you’re not claiming enough deductions.

Love your outfit, specially the shoes Stella!

This post made me so happy! My mom works at H&R Block and the company has been good to/for her. English is her second language and her being bilingual has also helped other Spanish-speaking clients (& helps me with my taxes too!).

For budgeting and adulting purposes, we use LearnVest. It was started by a woman whose goal was to make financial planning more accessible. We love it! We have our own financial planner, and he has given us action items, like making sure we both have wills and upping our contributions to 401k, and setting up a college fund for our son. Plus we have other financial goals that we contribute to, like saving for a house.
The up front cost is not cheap, but the monthly cost to keep it as long as you want is more than manageable.

This year I used TurboTax’s free online program (similar to the H&R Block one you mentioned, I imagine). A few thoughts:

1) I know everyone wishes for a refund (I got a $2000 one this yea! Woohoo!), but really you should adjust your withholding with the aim of having $0 refund. A refund just means you lent the government money for a year that you could have invested!
2) I track my investments in Personal Capital (free)–it’s the best program I have found for that–and my spending in YNAB ($50/yr). YNAB is hard work because you have to put in every expense (think a very sophisticated, digital check register), but man does it work! It’s the only way I’ve ever found to effectively keep to your budget.
3) I would encourage more than 20% in savings, especially for couples. Most can manage at least 30%. We’ve done as much as 55% when working to pay off undergrad student loans and save for graduate school. (We were only making $70,000 at this time so before anyone says this is a pipe dream–it is totally possible!)

One trick that I do with my finances is withdraw a certain amount of cash on the first of the month. The amount can differ depending on what your income is but this money is for happy hours, girls nights out, buying lunch if I don’t feel like eating what I packed, etc. The amount should be modest but enough to not make you feel like you can’t ever enjoy a latte on a Friday morning. You may have to plan around with the amount the first few months until you settle on the right amount. The idea is to get you to plan ahead and make smart choices. The first couple months I did it I made it halfway through the month and ran out of money! I had plans to meet a girlfriend later in the month so we ended up going hiking together instead of grabbing a drink. Since then, I’ve learned how to adapt and stretch my dollar and it’s encouraged me to come up with fun and cheap ‘date’ ideas.

You could certainly just set a monthly amount for yourself and use your debit card instead but I find that by physically withdrawing the cash from the ATM and watching my cash dwindle in my wallet over the month, I’m more aware of where my money is going and how much I have left. Plus, whatever money you don’t use you can tuck into a drawer and save it for something special – a massage, that ridiculously expensive mascara you’ve been eyeing at Sephora, etc. I’m by NO MEANS perfect with my finances. It’s taken me years to learn how to manage my money but posts like this help create a platform for women to get together and discuss topics that we may not feel proficient in. So, kudos CoJ team for another slam dunk! :)

For a retirement account for someone young (like Stella and me) I’d highly recommend s ROTH IRA. You can set it and forget it using Betterment or Wealthfront or Ellevest. Easy. You can automatically contribute too.

Worth checking out! A great way to find your ROTH is…your tax return :)

Great tips and I love the 50-20-30 plan…I definitely have to do that!

It’s great to start thinking about your financial health and future in your twenties. I work in a very rarefied field, I’ve never made more than $69,000 annually (and in my twenties I was *really* strapped), but I’ve always saved. I’m in my late fifties and our house is paid for, I’ll get a decent pension, and I’ve saved almost a million dollars. Live below your means, invest in a low-cost index fund, and for retirement start with a Roth IRA. Even if you don’t earn a lot, if you do things like bring your lunch to work, ditch cable, look for low-cost entertainment, cook at home, the effort will pay off and your savings will grow. Money doesn’t have to be intimidating: keep it simple!

I’m not sure about the 50-20-30 guideline. 20% seems really low to me savings-wise. It is recommended that you put 15% of your income into retirement savings, so this leaves only 5% for other investments, which is not very much. I like the general idea of using % guidelines for budget categories, but this particular breakdown sounds quite spendy!

Personally, I really love the experience of going to a CPA at H&R Block or Liberty Tax so that they make sure I don’t forget deductions. They also make sure we don’t get penalized for things. Last year I was worried that because I didn’t have insurance in 2015, I would have to pay the fee, but the CPA I was working with found a document from my husband’s employer that said I was covered the entire time, they just never told us! (Which, UGH. Thank god he doesn’t work there anymore.) That’s a $1000 mistake I would have made if I had tried to do it on my own. They also made sure I remembered to include all of the student loan interest deductions, which I didn’t realize was a thing! A free tool is great, but if you’re worried that you might owe money to the IRS and aren’t sure what you can do to minimize that debt, a CPA helps!

P.S., I’d LOVE to see more content about smart money habits on here for women in all phases of life/backgrounds! After not being financially literate for most of my 20’s and having A LOT of anxiety/shame about it, I’m finally starting to get on track and it feels amazing. Always looking for advice/tips. :)

Hi, I love posts about finances since I think its so important that we start thinking about this now. Im always totally lost when it comes to “investing” and doing something smart with my money, I’d love it if you guys did a post about how to make the most of your money and smart ways for ladies to start investing and growing it, thanks in advance!

Stella, congrats on doing your taxes early. I’ll follow suit and use my refund for a pair of those shoes you’re wearing. Are they from A Détacher?

I was also going to ask about the shoes… and where’d you get the white button up? It’s perfect!

Thanks for this article…
On another note, could you share where you got your shoes? They’re great!