February 1, 2018 • Newsletter
February is here, which means groundhogs, snow, more snow, and potentially higher paychecks, now that the revised 2018 tax rates have gone into effect. (Not sure what to do about any increase you see? Check out our write-up here. TL;DR version: Save more.)
So while you are watching your paychecks and being especially mindful about your money this month, here are a few more things to think about.
By now you should have received all your 1099’s and W-2’s from 2017. (If not, you may want to inquire about your forms to see if something is lost in transit. Let’s hope it’s not. That information includes your tax ID number.) Gather the information and get ready to file your 2017 taxes. We’ll talk more about them next month, but feel free to get a head start if you are ready to go.
Also this month, visit your company’s HR or Payroll office if you have a W-2 job to make sure your withholdings are on track for the year. You’ll no longer be able to claim exemptions under the new tax law, and your federal tax rates might go down a bit, which means it’s a good idea to check in with your HR or Payroll office to make sure you are on track for the year. Plus, if you have freelance gigs or other sources of income, you can request a bit of extra withholdings from your W-2 job to cover your self-employment taxes in lieu of making quarterly estimated tax payments. Use Form 1040-ES for a quick estimate of your estimated tax liabilities for 2018 (once the form is updated), and talk to your HR or Payroll office about additional withholdings.
Review your calendar (the holistic one you put together last month) and see how you are doing on the tasks you outlined and the time you allocated for your goals. If you are on-track, awesome. Keep it up. If not, the start of February is a nice time to revisit whatever you aren’t feeling great about in your calendar.
That “fresh start effect” that we all love so much on January 1 applies to February 1 as well… And every other first during 2018. So take some time at the start of this month to check in with your calendar and make sure it is on track. (And don’t think you need a magic tool to do this… I had a conversation with someone last week about how effective a simple list can be. No special planning tool required.)
It’s February, which means it is time to build your budget (your real one) for the year. You already started doing this by planning your calendar and setting goals. Now, just add numbers to those goals and each event. Sketch out the expenses you have on a monthly basis, both to exist personally and for your creative career, and pay close attention to your spending this month to make sure what you sketched out is complete. Use your spending records from January to make sure you haven’t forgotten anything, and by March you’ll have a relevant, functioning budget to help keep you on track for the rest of the year.
If you use a formal recordkeeping system through a software platform, there are probably built-in tools to help you use prior data to estimate future spending. If you prefer an Excel spreadsheet or a long sheet of paper, you’ll have to do a bit more research into your own spending, but February is a great time to do that. It is perfectly fine to use your past spending habits to help you estimate amounts to budget, but don’t forget how liberating it can be to really imagine your life (and your budget) from scratch. This “zero-based” budgeting approach can help you focus on the expenses that really add value to your life, rather than those you may have adopted as habits.
Schedule a Chat
This month, we’re working with clients on planning for 2018 and identifying metrics to make sure everything is on track to meet 2018 goals. And of course, those goals are financial ones, plus creative, personal, and professional ones too. Plus we’re talking taxes. We LOVE talking taxes.
Use this link to schedule a time to talk about these or any other questions you’d like to discuss. We’re here to help.
February 2018 Wrap-Up
This month is a short one, but there is plenty to do to stay on track for the year. Enjoy the snowflakes… They’ll turn to raindrops before you know it. Until next month, all the best with your financial empowerment…