February 7, 2018 • Musings
Many people will see their W-2 paychecks go up a bit this month. The lower federal tax rates passed as part of the 2017 Tax Cuts & Jobs Act are going into effect, which means less will be withheld from your paycheck. So you get a bit more money. Not a lot, not a life changing amount, but a bit. And here’s the real risk: You might not actually notice the increase right away. Instead, in a few months, you might notice your overall bank balance is a bit higher than you expected. (It might take that long for the additional money to become noticeable to you.) By that point, most of us will have stopped talking about taxes and moved on to whatever mid-year distraction we are experiencing, so you will have forgotten that this extra bit of money may end up costing you when it comes to healthcare and any social services you may value. You might just feel a bit wealthier and adjust your budget accordingly, say by spending a bit more here or there. Not a life-changing amount, but a bit.
Please don’t not notice the increase. Notice it, be mindful of it, and choose to save it (or spend it) with intention. Not because you feel more financially secure because of the balance in your bank account. But rather because you are making informed choices about allocating your resources to support yourself, your creative practice, your future, and your community.
And if I were you, I’d make sure to save that amount. I’d prioritize building an emergency reserve fund and some retirement savings so that the real gift of tax reform is your own financial empowerment.