The holidays are over and you find yourself in the quagmire that is your job. As you eye the clock for the 80th time you sense a troubling thought bubbling to the surface. Now it’s “tax season.”
The good news is that “tax time” is also an excellent time to become financially literate.
While you’re sitting at the kitchen table with your receipts and bills for 2015, stop and really look at them for one hot minute. If you kept good records you would be able to see the various things you splurged on. You can take this knowledge and cut the fat in 2016.
Besides pleasing your accountant, detailed record-keeping also makes it easy to come up with the central theme of financial literacy: budgeting. And the overarching theme of your budget should be savings. An ample pool of cash standing by can mean the difference between surviving a life-changing event and persevering through it.
Another important point is that a spending plan is only as useful as the information you put in it (Garbage In, Garbage Out). When you create a household budget, make sure to include your discretionary items, as well. Not only will they help you set limits, but they will help you establish goals.
Part of being financially literate is knowing when you are in over your head. And we would all be in over our heads if we tried to do our own taxes. I remember a friend telling me he was doing his own taxes…and he paid thousands more this year than he did with the help of an accountant the previous year, and his income had actually decreased.
Accountants are not the only financial professionals available to save you when you are in over your head. People like attorneys, Certified Divorce Financial Analysts, Certified Financial Planners, bookkeepers and daily money managers can be excellent resources – and, in the event your refund is dependent on some sort of writ or statement or schedule, they can be real life savers.
Not everybody is a detail-oriented paper person. Some people are artists (I am not – I can’t even draw a stick figure!). If you always find yourself scrambling trying to get things together and spending hours trying to understand what is tax deductible, it doesn’t mean you are financially illiterate. The truly financially literate person recognizes that delegating tax preparation to an accountant is the opposite of penny wise and pound foolish.