Jean Chatzky’s Simple Money Rules: Tax Time
March 16, 2012 : Jean Chatzky - Guest Contributor
Ed Note: We’re honored to have Jean Chatzky, personal finance expert, author and TV personality, as a guest contributor on Block Talk. Her new book Money Rules: The Simple Path to Lifelong Security is now available at Amazon.com.
Tax time is a little like the back to school season or the New Year. It’s a perfect time to take an overarching look at your finances, perhaps do a little re-organizing, and get off to a fresh – and better – start. It’s also a great time to adopt a new habit or two. That’s one of the reasons I decided to launch my new book, Money Rules: The Simple Path To Lifelong Security at the height of tax season. I know you’re thinking about your money right now. And I know you’re wishing your financial picture looked a little brighter. Taking on a few of the suggestions in this slim little volume can help. Here are two to get you started.
1. Money Rule: Save Before You Spend
I’ll bet many of you are thinking that one day, very soon, your tax refund will land in your checking account (or if you went the pencil and paper route to filing, arrive in the mail.) And you may have big plans for that moolah. Let me intercede. Before you spend every last one of those dollars – and if you’re average, you’ll be getting close to 3,000 of them – sock a good chunk of them into savings. If you can get yourself into a habit of saving a certain percentage of your take before you spend, every time you get paid and every time you get a windfall, then you will automatically be living below your means (another one of my Money Rules, by the way). You will never run out of money. Because you will always have funds put away for emergencies and for long term goals. So, how much do you need to save? At least 10 percent, if you’re coming to the saving party in your 20s or early 30s. If you aren’t arriving until you’re older than that, aim for 15 percent instead.
2. Money Rule: If It’s Good For The Planet It’s Usually Good For Your Wallet
Think smaller cars, programmable thermostats, fluorescent lightbulbs… the list goes on. And don’t forget that there are some pretty significant tax benefits that may come along for the ride. If you made energy related improvements to your home in 2011 – including adding insulation, energy-efficient exterior windows and doors, and certain roofs – you should remember you can claim up to 10% of the cost of those improvements up to $500. This $500 limitation is a lifetime maximum limit. So if you’ve claimed at least $500 in a prior year, then you’re not eligible for any credit in 2011. And you have until the end of 2016 to claim a tax credit equal to 30% of the cost of renewable energy systems that you install in your principal or second home. These include solar water heating and/or solar electric power systems, small wind turbines, and geothermal heat pumps.
The Money Rules are simple. But they’re effective. Putting them into action now can help you make the most of tax time – building better habits for a positive impact not just this year, but well into the future.
Jean Chatzky is a leading personal finance expert, award-winning journalist, best-selling author, finance editor for the TODAY Show, and host of Cash Call on RLTV. Her new book MONEY RULES: The Simple Path to Lifelong Security is available now at Amazon.com. For more great money tips and rules follow Jean on Twitter @JeanChatzky or visit her on Facebook at www.facebook.com/JeanChatzky.