2023 resolution: Get your finances right.
By Nafeesah Allen, Ph.D. | Updated on February 13, 2023
On the heels of the Great Resignation and the ongoing cost of living crisis, the current financial climate feels like a minefield. Predictions of slow economic growth in the U.S. and a looming global recession might, understandably, make you cautious to make big moves to fund your retirement, invest in the market, or even buy your forever home.
Because personal finance is never one-size-fits-all, we spoke to six experts to ask their must-do advice to start 2023 off with solid financial footing. Their perspectives range across savings, investing, retirement, and even tax planning, but each provides insight into the ways that keeping it simple in the short term can have long-term benefits.
Don’t wait until April 18 to start prepping your taxes.
“Mark April 18 on your calendar, because three different chunks of money all come due on the same day,” says Hannah Cole, a tax expert and agent at Sunlight Tax. “A little advanced warning helps you budget for it so that you don't end up messing up your personal finances.”
The first two months of the year are a good time to start reviewing your tax responsibilities and setting aside funds to make good on them by the April 18 due date. On that date, you’re on the hook to pay taxes on income earned for the prior calendar year, first quarter estimates for the current year (for self-employed people), and contributions to your individual retirement account. It's important to note that even if you get an extension to file your taxes, that only means you get extra time for your paperwork, Cole explains, but your bill is still due on April 18.
“Whether or not you actually owe quarterly taxes might depend on how much of your income is from your self-employment," Cole says. "So, if you're in the world of side hustlers, where you have a day job and most of your income is on a W2 as an employee, then you might not need to pay quarterly taxes.” However, April 18 should still be an important date to you, because it's the deadline to put money into your retirement account and reap associated tax advantages from a 401(k), IRA, or Roth IRA.
RELATED: How to Save for Retirement—No Matter Your Current Finances
Cole says she's seen plenty of people run into issues because they weren't aware, or didn't plan for, all of these deadlines converging on the same date. "They'll end up with good intentions to fully fund their retirement," she says, "But then they see that tax bill from the IRS and then they're like, ‘Oh, shoot the quarterly payment. I forgot about that too,’ which is additional.” Before you know it, your cash is gone.
So, start the planning process early (read: right now) and save up for the inevitable. April 18 isn’t the start of tax season—it should be close to the end.
RELATED: How Do My Investments Impact the Way I File My Taxes? Find Out on the Money Confidential Podcast
This article first appeared on Real Simple on February 13, 2023
