The Finance Blogger

Plan Your Savings and Taxes for Next Year

Plan Your Savings and TaxesThere is no time like the present to start to plan your savings and taxes you need to pay next year than right now. Sounds melodramatic doesn’t it. Well when I posted this particular post, it was April 7th and consumers living in the United States were almost finished with their tax filing. Which is due April 15th and Canadians had until the end of April to complete theirs. While all of this information is fresh in your mind, why not give some thought to next years taxes. How you can decrease the amount of tax you owe to the government?

Plan Your Savings and Taxes forĀ  Next Year

If you have just finished your tax filing, this is a good time to set an appointment with your accountant. Begin planning for the following year in an effort to minimize your taxes. Let’s be very clear, there is nothing wrong with using legal means to find and use deductions to minimize your taxes. Using fraudulent claims and deductions that are not allowed in the eyes of the tax department is wrong and illegal. That is why you hire an accountant to keep you from being fined by the tax department or worse going to jail.

Last years taxes are done and there is nothing you can do unless you own a company. Personal taxes are completed. In some jurisdictions you can refile corporate taxes and average the tax owing so that you pay less tax. This is perfectly legit. However you have to plan for this and make sure that all deductions are in order and that you have shown all income properly.

Planning at the end of one tax year filing date is the best time to do this for the current and upcoming years.

Start With a Budget

If you need to contribute to an RRSP or a 401K, then you have to know what your budget is, how much you have coming in and how much will be left over after all bills are paid. Don’t forget to save some for yourself and the rest should go to savings and tax deductible savings if possible to minimize your taxes.

Some times doing a budget like this will identify that you are spending more than you are bringing in. This is the time to do something about it before you get into a bad debt situation. Rein in those expenses and put some money away for a rainy day in your savings account or in your tax deductible account.

Budgeting is tough and sticking to the budget is even more difficult. However like any thing we have to work hard for, the pay off is worth it. Financial independence, lack of worry and stress and savings for a rainy day make it all worthwhile.

Track your Budget Plan

Once you have a budget plan in place the next step is to track your budget every week. I do mine on Saturday mornings. Doing it once a week means that it does not take a lot of time. It helps me identify problems quickly if I am tending to go off my budget.

You will likely need to make mid course corrections, however this should be expected and anticipated. Examine what has changed, and what you need to change to get back on track. Develop a plan that takes you back to meeting your goal so that you can achieve your financial objectives. Which among others means minimizing the tax you pay.

We are going to write more posts along these lines. If there is a particular subject you would like to see, please leave a comment. Also if you comments on what we have written, those are welcome as well. Spam comments will be auto deleted.

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