It’s only been a few weeks since many people rushed to file their taxes before the tax deadline in April. Were you surprised this year at how much you got back from the government? Or did you end up paying a lot of extra tax instead of getting a refund?

Being on either end of the spectrum — massive refund or massive tax liability — isn’t a good place to be. No one wants to owe the government a ton of money, but letting Uncle Sam sit on thousands of dollars over a given year isn’t wise either. If you found yourself in either of these camps you need to look at adjusting your tax withholding in order to eliminate the gap between what you paid in tax and what you were supposed to pay.

How to Adjust Tax Withholding

Making adjustments to how much tax is taken out of your paychecks is an inexact science that involves tweaking the withholdings on your Form W-4. You can make these adjustments at any time during the year. You can also adjust your withholdings as many times as you want (or as often as your human resources department will put up with).

Use Form W-4 to adjust how much tax you want withheld from your paycheck

To change the amount of tax withheld, you can use the Personal Allowances Worksheet in the middle of the first page on Form W-4. (There is also a more detailed worksheet on the back that helps you figure in your deductions if you itemize your taxes, see form.) Calculate your allowances based on your current situation and be sure to carry that number down to Line 5 on the first page. Fill in the rest of your information and pass it on to your payroll or HR department, whichever handles the processing of W-4 forms.

Caution: Don’t Make Huge Adjustments

Calculating your personal allowances should help you get relatively close to even with the government. You might owe a little or get back a little on a refund. The goal is to avoid the huge refunds and huge tax liabilities.

However, don’t overreact if you ended up with a huge tax liability or refund this year. Tweaking your allowances and withholdings should be done incrementally. If you had 8 allowances last year, don’t drop it to 0 this year because you don’t know exactly what that would do to your paycheck. Take small steps and see how much extra tax is taken from your check (or isn’t, if you’re trying to reduce a massive refund). You’ll be more capable of adjusting to your new paycheck and monthly income with small steps than jumping in with both feet.

The IRS also has a very useful (albeit somewhat complicated) calculator that helps you adjust your withholdings for the rest of the year to avoid tax problems.

When to Adjust Your Tax Withholding

Including receiving a surprise — good or bad — when you file your taxes, are there other reasons to change your tax withholdings?

Huge Tax Liability

The most critical issue that requires a tax withholding change is a big tax liability. There is nothing worse than having the government inform you that you owe them a few thousand dollars. For many cash strapped families, this can be devastating.

Big Tax Refund

Some people prefer to get huge refunds because they use that money to pay down debt or take a trip. From a financial standpoint, you are better off having an extra $300 in your pocket every month than getting $3,600 back at tax time. You can save, invest, or pay down debt faster when you get the money each month. However, this does require financial discipline. (You’d be better off leaving things as they are if you would just blow that extra $300 every month.)

Significant Life Change

Getting married? Just have a new baby? Paying mortgage interest for the first time? All of these big life changes can significantly alter your tax liability. Recalculate your personal allowances each time a new life change happens.

Don’t Forget State Withholding, Too

It is easy to think of the Federal government as the only place you need to make tax changes with, but all of the above holds true for your state tax withholding as well. You could give yourself a big monthly income boost by cutting your tax refunds in half from both the Federal and state governments and getting the extra cash each month instead.

Related Articles:

1. When Will I Get My Tax Refund?
2. Newlyweds and Taxes…
3. Refund Anticipation Loans Suck

~$~

Your mailbox is full of bills and you’re starting to receive phone calls from debt collectors. You know that you need to get your financial house in order, but it seems like you never have enough money to make it through the month, let alone pay down your debts. Digging yourself out of debt may seem impossible, but it can be done. Here is what you need to do to prioritize your bills and get yourself debt-free:

Sit down with all of the bills at once.

prioritize how you pay off debt

In some ways, this is the most difficult step. Seeing all the numbers in black and white can feel overwhelming. But recording your monthly outflow—including due dates, fees and interest rates—is necessary before you figure out how to tackle the payments.

Make a budget.

Once you know how much you owe each month and when, you can figure out how much of your income is needed to pay your bills. If you do not make enough money to cover all of your monthly bills, then you need to start prioritizing what you pay. At the top of the list should be the bare necessities: mortgage or rent, utilities, food, and transportation. With these things in place, you know that you can safely keep a roof over your head and continue working. Any money left over after these necessities are met should go to your other debts.

Prioritizing

After you have covered what you need, it’s tough to know which debts to work on next. While not paying some debts can lead to serious consequences, others offer you some leeway. It’s also important to know your rights.

If you are already being hounded by debt collectors, know that you have rights under the Fair Debt Collection Practices Act (FDCPA). You do not have to put up with harassing behavior, contact at your place of work, or abusive language.

Here are the debts you must pay, in order from the most to least important, as well as a breakdown of what you can expect from each one:

1. Child support. Since these payments are mandated by the courts, failure to pay child support can land you in jail. If you are having difficulty paying child support, you can petition the court to modify your payment. However, that process can take some time and you are not guaranteed a modification.

2. Taxes. Non-payment of property or income tax can lead to the government seizing your home and/or garnishing your wages. Don’t let it come to that. If one of your debts is to the IRS, call them and find out if you can negotiate your payment. While the IRS will not forgive your debt, you can generally work with them to find a solution that will work for you.

3. Student Loans. While student loan debt offers you a great deal of leeway, it’s important to remember that the government can try to collect on defaulted loans in ways that are not available to typical collections agencies. For example, the federal government can take any income tax refunds you receive until the debt is paid, garnish your wages, and potentially take federal benefits like Social Security retirement.

If you are having trouble paying your bills, call and ask to have your student loan put on deferment. It will give you breathing room and keep your tax refund safe.

4. Credit Card bills. Paying the minimum on these will keep creditors at bay, but it will also keep you in debt for a long time. However, these bills should be lower priority than those that keep a roof over your head. Also, though credit cards do not advertise this, they will work with card-holders who are having trouble paying. They would rather you call and explain your situation and ask for a temporary change in your minimum payment, or even a short deferment, than have you simply not pay them.

5. Medical bills. The medical community recognizes the high cost of health care and most hospitals have a financial office that will work with you. For example, my son had to have a minor procedure at a children’s hospital when he was 7 months old. Our insurance covered 90% of the $7000 procedure, but we still had to pay $700. The hospital is allowing us to pay $50 per month without interest for up to 18 months, which will give us more than enough time to pay off the debt.

If you have high medical bills, talk to the hospital about how to make payments over time.

Strategies

Even if you know which bills to pay first in terms of potential consequences, it can still be confusing to know what to pay and when. There are two major strategies for debt payoff: Dave Ramsey’s Debt Snowball, and Suze Orman’s Highest Rate First strategy.

The Debt Snowball

This approach might not be the best mathematically, but it offers a great psychological boost to anyone who needs to know they are making progress. Ramsey suggests that you pay the minimum on all of your debts except for whichever one has the lowest balance. Send however much you can to that low balance debt until it is paid off. Then, send that same amount, plus the minimum you were already paying, to the next lowest balance debt. When that is paid off, send the combined amount from the first two to the next lowest, and so on.

The benefit of this approach is that it allows you to see your progress. Each month, you are still sending the same amount of money to all of your bills, but you are seeing them killed off one by one.

Since you are paying in order of low-to-high balance, rather than paying based on how high your interest is, you may find that you end up spending more overall, however. This is why Suze Orman suggests you use her strategy.

Highest Rate First Strategy

In this case, you list your bills in descending order of interest rates. You will send the minimum amount to everything but the highest rate, and send whatever extra you can to that one. By doing this, you will minimize the interest you will pay over the life of the loans. Once you’ve paid off your highest interest rate debt, move on the next, and then the next.

While this approach makes more sense mathematically, it can get a little discouraging to feel as though progress is very slow. Finding a way to track your progress—like with a debt payoff thermometer that you post in your home—can help to make this strategy feel more exciting.

The Bottom Line

The main thing to remember when prioritizing your debts is that any strategy is better than none. Be proactive by contacting your lenders, and find ways to motivate yourself to pay down your debts. Your consistency will pay off.

Photo credit: Alan Cleaver

Related Articles:

1. The Debt Snowball Method for Reducing Debt
2. Is Dave Ramsey’s Debt Snowball the Best Way to Pay Off Debt?
3. When to Think Twice About Paying Down Your Debt

~$~

One way you might end up with a retirement account is by inheriting an IRA. If a loved one passes and leaves you the assets in an IRA, you can use these assets to your advantage. However, it’s important to realize that there are some interesting rules about how an IRA is passed on — and how you can withdraw money from it.

Beneficiaries

There are many rules when inheriting an IRA

The first, and most important step is to understand the rules about beneficiaries. In this case, the beneficiary’s relationship to the deceased person has a major impact on how the IRA is treated, including whether or not you can continue making contributions to the account, and how and when you can (or must) make withdrawals from it.

Spousal IRA inheritance. The easiest transition is when a spouse is the inheritor. You can choose to designate yourself as the owner, or as a beneficiary. By choosing to name yourself as the owner, you can roll the IRA over into your own IRA – at which point it becomes yours and all the normal traditional or Roth rules will apply to it (contributions, withdrawals, and other rules).

You may also choose to own the account as a beneficiary. This allows you, as a spouse, to withdraw from the IRA with no 10% penalty. For some of those who are not 59 1/2, it can be a good idea to continue to own the IRA as beneficiary so that there is access to the money. Realize, though, that if the IRA is a Roth, the five-year rule applies to when the original owner opened the account. Withdraw before the five-year rule is met, and you could pay income tax (but not a 10% penalty) on the withdrawal.

Non-spousal IRA inheritance. Non-spouse beneficiaries also receive the ability to withdraw without a 10% penalty, no matter their age. However, they have to start taking distributions by December 31 of the year after inheriting. Withdrawals and required minimum distributions can become complicated when you inherit an IRA from someone who wasn’t your spouse. Here is a good explanation from SmartMoney.com. You may also find it helpful to seek professional assistance from a financial advisor or tax pro.

Rules are also different if an estate is involved. An IRA that benefits the estate has to be entirely withdrawn within five years. The exception is if the deceased was already taking required minimum distributions; distributions are then figured based on what the deceased would have been taking.

Realize that the beneficiaries named on the IRA forms trump whatever is in the will. If no beneficiaries are named, the IRA is transferred using whatever rules the custodian has for the occasion.

Transferring Inherited IRAs

When an inherited IRA is transferred from one custodian to another, you need to do what is called a “trustee-to-trustee” transfer. If you don’t do this step right, it can look like you withdrew all of the money — and it can cost you. If you aren’t the spouse, the IRA has to be retitled. This process, for inherited IRAs, requires that you include the name of the original owner and your own name. So it would be worded as: “Name of Original Owner, deceased, inherited IRA for the benefit of Name of Heir, beneficiary.”

It’s a big name, but important. You can also split an IRA, and you should do so if there are multiple beneficiaries. Each beneficiary should receive his or her own inherited IRA for the proper amount. That way, you avoid problems down the road, and each beneficiary is responsible for his or her own inherited IRA.

There are a number of rules associated with inherited IRAs (See IRS Pub 590 for full details), and it’s a good idea to have a knowledgeable attorney or advisor help you with the transfer, and help explain your options. Spouses have more options, and it’s a good idea to get advice before you do anything with an inherited IRA.

Related Articles:

1. How New Overdraft Rules will Affect You
2. Ask the Readers: Is Regifting an Acceptable Practice?
3. TSP Changes Login Procedure

~$~

Yahoo recently announced they would fire their CEO four months into his tenure after it was revealed that his resume had some “inconsistencies” with his academic credentials. If you haven’t read the stories, his bio at Yahoo lists his undergrad degrees as Accounting and Computer Science, but he only has an Accounting degree.

There are a few varying stories regarding whether or not Scott Thompson submitted a falsified resume to Yahoo. He says he didn’t even submit a resume, and his interview and subsequent hiring were based on his body of work and his background (he was the former President of PayPal and has served as director at several other companies, so he has extensive leadership experience). But CNN reported that Yahoo’s annual report filed with the SEC falsely listed the Computer Science degree – and this is a problem because the CEO is required to personally sign the document and attest to its truthfulness.

A fraudulent can cost you your job and reputation

Regardless of whether or not Thompson submitted the false resume, his official bio contained false information – and that lead to his dismissal as CEO. (To be fair – there is a lot going on behind the scenes here, as the investigation was prompted by some minority shareholders who wanted representation on the board). But the fact remains, that Thompson likely would have gotten the job without the false information in his resume or bio, and there probably wouldn’t have been any reason to fire him 4 months into his tenure.

Resume Fraud Can Cost You a Job – and More

Scot Thompson lost his job – and his severance (Thompson was, however, able to keep $7 million worth of signing bonuses and stock grants – not bad for 4 months work).

I’m sure Scott Thompson will land on his feet. He has an extensive leadership background and continues to serve in other leadership capacities. In the grand scheme of things, this likely won’t prevent him from finding another job. It does however, create some long term problems with credibility. Many corporations and boards place a high value on ethics, and being caught in a fraudulent scandal will automatically cross him off the list at some companies. So he will likely find work, but not as easily as he may have otherwise done it without this hanging over his head.

It’s not just high ranking people who falsify their resumes and bios. The same thing can happen to you if you submit a fraudulent resume for a job application. Most companies and hiring managers do some sort of background check when they hire employees. It may be as basic as a criminal background check, or, for higher level positions, it can be as deep as a full background check, including verifying your resume and educational background.

The safe thing – both professionally and morally – is to always be truthful when writing your resume. The last thing you want is to be hired, only to be fired shortly afterward for a fraudulent resume. You would not only ose the job you just got, but potentially lose out on other positions, either those which you declined interviews for after you got hired at your new job, or from other companies which would decline to even interview you if they got wind of your lack of ethics when you applied to your former postion. And don’t dismiss the last possibility – some industries are very tight and many of them have contacts at other companies. I’ve worked in some of those industries where news travels very quickly and it is easy to see your professional stock rise or drop very quickly.

Falsifying your resume is just not worth damaging your personal or professional reputation.

Related Articles:

1. Applying For An MBA Part 2 – Resume
2. Are You Making These 7 Resume Mistakes?
3. A College Degree Does Not Guarantee a Job

~$~

FaceBook will soon launch their IPO and shares of the company will soon be available to the general public and institutional investors (the IPO is scheduled for Friday May 18th). But I don’t count myself as one of those who will be lining up at the opening bell to purchase stock in FaceBook. Why? Well, there are a lot of reasons, but perhaps Warren Buffet said it best:

“The idea that something coming out…that’s being offered with significant commissions, all kinds of publicity, the seller electing the time to sell, is going to be the best single investment that I can make in the world among thousands of choices is mathematically impossible,” said Buffett.

Buffett’s business partner Charlie Munger also added:

“I don’t invest in what I don’t understand. And I don’t want to understand Facebook.”

Well, it looks like shares of FaceBook won’t be added to Berkshire Hathaway any time soon, but should it be added to your portfolio?

Are you buying FaceBook at the opening bell?

Should You Invest in FaceBook?

Deciding to invest in a company depends on many factors, and you should always do more than read a quote from a famous businessman and investor when making a decision to invest. So let’s look at a few other issues before making the decision. Most investors are interested in things such as valuation, earnings, growth potential, long term business plan, and other intangibles. You can find much of that information in the company’s S-1, which is filed with the SEC.

How Much is FaceBook Worth?

Right now, FaceBook hasn’t announced the exact price of their initialstock offering, though there is a range of $28 – $35 $34 to $38 per share (FaceBook has already raised the target price due to high demand). They are offering 337 million Class A shares, which puts the valuation at roughly $106 billion on the high end (based on 2.8 billion outstanding shares, which is the number if all employee stock options are exercised). That’s an extremely high valuation for a company that only earned $1 billion last year. (That makes the P/E ratio for FaceBook somewhere in the range of 100 t0 1, which means it will take 100 years of earnings at the current rate to pay off).

Will FaceBook Continue Growing? The only way Facebook can justify their P/E ratio of 100 is to continue growing at a massive rate. Google, for example, had an IPO price of $85, and  P/E ratio of 185 at their IPO date. The stock has since risen to the $600 range, given initial investors a nice return on their investment. Google’s current P/E ratio is in roughly 18 (on date of initial publication if this article, click the previous link to find the current P/E ratio and other stock info).

But FaceBook isn’t Google. It’s true that they are in similar markets and both are internet based. FaceBook also has an enormous user base, with over 900 million users. The only way for this to be a good initial investment is for FaceBook to continue growing at a breakneck pace. Without the continued growth, there is no way to justify a P/E ratio of 100. The question many investors are asking is whether or not FaceBook has saturated the market already and if they will continue to grow.

What is FaceBook’s Long Term Business Plan?

FaceBook currently makes the majority of their money from advertising, though they also make money through FaceBook Credits which are used for in game apps, and FaceBook also recently announced plans for a paid app system. FaceBook has also recently acquired several other internet companies, most namely the recent $1B acquisition of Instagram. Will they be able to turn those new businesses into revenue growth? It’s quite likely that FaceBook has other revenue streams in work.

How to Buy Shares of FaceBook

If you want to get in on the IPO, then you need to act quickly – there are rumors that the underwriters will stop taking orders for FaceBook stock Tuesday afternoon, in advance of the Friday launch. If you want to place an order, then you will need an account with Charles Schwab, TD Ameritrade, Fidelity, E*Trade, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, BC Capital Markets LLC, Wells Fargo Securities LLC, or one of the other brokerage firms helping to underwrite the IPO. (there are approximately 31 in all). Keep in mind that if you don’t make the initial offering, you should be able to buy shares starting the next business day.

Will I ever Own FaceBook Shares?

As I mentioned above, I don’t plan on buying FaceBook in their initial offering. Perhaps FaceBook will follow in the steps of Google and look like a bargain a few years from now, or it might follow the path of many other IPOs and drop shortly after the offer goes live. But one of the other reasons I’m not investing in FaceBook at the onset is that I rarely buy or trade individual stocks. I primarily invest in index funds and low cost mutual funds, and currently only own two individual stocks, both of which are fairly stable blue chips that I plan on holding for the long haul. That isn’t to say I will never own FaceBook. Even though I don’t plan on buying now, I’m sure that FaceBook will one day be included in one of the major indexes and find its way into  a variety of index and mutual funds, so at some point, I will probably indirectly own a few shares. As for now, my involvement with FaceBook will remain purely social. <<— get it? heh.

Do you plan on buying shares of FaceBook?

Related Articles:

1. How to Calculate the Yield on Cost of a Dividend Stock
2. How the Price to Earnings Ratio is Calculated
3. Win a $50 Amex Gift Card from GoBankingRates.com!

~$~

Whether you are building, remodeling, or just doing a few home improvements, it can help to hire a general contractor. There are those who point out that you can be your own general contractor, and this is true. However, if you don’t have the time, skills, or the inclination to be your own general contractor, it is always possible to hire someone.

A general contractor can simplify the process. You hire the contractor, and he or she hires everyone else that works on your project. However, you do need to be careful. Here are 5 things to keep in mind as you hire a general contractor:

1. Check for Licenses and Insurance

Don't have the skills? Hire out!

You want to make sure that the general contractor you choose is properly licensed and insured in your state, as well as bonded, where necessary. Ensure that the general contractor only works with others who are properly licensed as well. You want to make sure that any contractor you hire is likely to be following state regulations. It’s also a god idea to do some background research on them by reviewing their profile on the Better Business Bureau, or other review boards.

2. Look for Specialists

It can help to find a general contractor that specializes in your project. Check around for those with experience. You want someone who knows your project. Even if the general contractor doesn’t specialize, it’s still possible to work with a general contractor who knows how to work with specialists. Find out who the contractor plans to hire, and find out whether these sub-contractors are specialists.

3. Get Estimates in Writing

As you shop around for estimates, make sure that you get them in writing. While no estimate is going to be the final, it can still help to have estimates in writing in order to better compare services of different contractors. You can also ask for a detailed estimate that allows you to get a better idea of what to expect, and that offers a more accurate expectation of costs. Be wary of contractors that seem to offer a much lower rate than others. They might be lowballing, or you could end up with inferior work.

4. Create a Detailed Contract

Once you have chosen a general contractor, you need a detailed contract. This contract should include the work that will be done, as well as information on the rates and costs involved. In some cases, it might be possible to stipulate a cost cap on the project. Your contract should also include your responsibilities. You need to know what you are responsible for, as well as what the contractor will accomplish.

5. Use Your Gut

If you want to know about someone, one of the best ways is to look him or her in the eye. This is especially true if you are doing business. While you can’t always avoid being swindled this way, meeting with potential contractors can help you get a gut feeling about them. If you have doubts about someone, don’t hire him or her. Instead, hire a general contractor that you feel you can trust. Meeting the contractors, and watching how they conduct themselves as they look at your project area, can give you a good feel for what to expect.

Photo credit: USACEpublicaffairs

Related Articles:

1. How To Find and Hire Reliable Contractors
2. Consider Contracting and Freelancing
3. Looking for Freelance Work – Check out oDesk

~$~

If you are a small business owner, chances are good that you will need a credit card at some point. As a small business owner, I use my business credit card for at least half my purchases, primarily because many of them are made online or where it is inconvenient to use a business check. Aside from the normal consumer protections credit card provide, many of them also offer a solid rewards program, which makes using them a good idea if you pay them in full each month.

If you have a small business with established credit and need a credit card, then take a look at the CitiBusiness ThankYou® Card, which is a new card from Citi. This card offers a standard rewards program based on Citi’s ThankYou® Points. It pays one ThankYou Point for standard purchases, and three ThankYou Points in rotating eligible business categories.

$150 Cash Bonus. For a limited time, new cardholders can earn a $150 cash bonus when they spend $3,000 within the first three months of card ownership. The bonus is paid in the form of 15,000 bonus ThankYou Points, which can be redeemed for gift cards, cash, or a statement credit.

This card also features a 0% APR introductory period of six months for new purchases, which gives you some float if you are anticipating any major purchases. The card features a low variable interest rate after the 0% intro APR period.

There are no limits to how many points you can earn on purchases, and your points never expire. Linking a Citi business card to your Citi account can be a good way to pool your ThankYou Points to redeem them more quickly, or for greater rewards.

More details: Here are some quick hits about the CitiBusiness ThankYou Card:

• Designed for businesses with an established credit history
• Earn 15,000 bonus ThankYou(R) points after you make $3000 in purchases within 3 months of cardmembership – enough for $150 in gift cards
• 0% intro APR on Purchases for 6 months. After that, 13.24% variable.
• Earn 3 ThankYou(R) points for every dollar you spend on eligible purchases in rotating business categories.
• Redeem points on things for your business or for yourself like business supplies, merchandise, gift cards, travel or even cash.
• No limit to the amount of points you can earn on purchases and points don’t expire.
• No annual fee *

Click to learn more, or to apply.

Related Articles:

1. Citi ThankYou® Preferred Card Review – $250 in Gift Cards
2. Citi ThankYou® Card Review
3. $300 Gift Card Bonus with the Citi ThankYou® Premier Card

~$~

One of the most effective ways to save money is by creating savings goals. This gives you a defined reason why you are saving for something, instead of just throwing money into a pot and pulling it out whenever you “want something.” If you want to take it a step further, you can create a sinking fund, or a unique subaccount for your savings goal. This is easy to do at many online banks, including ING Direct and Ally Bank.

Sub accounts make it easier to balance multiple savings goals, but they also make it easier to spread your money out too far if you aren’t careful. When you are trying to save for multiple things all from the same paycheck, you can end up allocating so much cash to your goals, you have little life over for day to day living. While it is good to have savings plans in effect, it is also very crucial that you find a balance for each of your goals. Otherwise you may end up financially strapped in one area and find you have to take from one account to make up for another deficiency, essentially destroying your entire plan.

Do you have multiple savings goals?

So how can you keep things in balance? It’s not difficult but does require some forethought and continuous effort. Here are some tips for finding a balance in savings goals:

Make a List

In order to know how you have to save, you have to know how you want to save. Start by making a list of what you want to save for and define your goals (why you want/need to save). Categories like retirement, emergency fund, vacations, household bills, and big ticket purchases can be a start to your list, depending on what your goals and needs are.

Prioritize Your List

Once you have established a list, you may find that you do not have enough income to sustain all of these goals. You need to prioritize the categories in order of importance for you and your financial needs. You need to establish the priority of each item so you can split your allocations accordingly. Included in the prioritization should be the definition of which of your savings goals are short term and which are long term and which goals are most likely achievable and realistic.

Check Out Your Budget

You need to gather your income statements and your bills if you have not already established a budget. Figure out just how much money you have left to put towards your goals each month on a consistent basis.

Do Your Division

For each of your goals, you need to establish the amount you strive to achieve. You also need to establish the amount of time you need to accomplish your goal. For instance, if your goal is to max out your IRA each year, you would start with your $5,000 annual contribution limit, then divide by 12, which gives you $416.66 per month (max limit for a single investor under age 50 – see this link for all IRA contribution limits).

A good short term example would be a large purchase (say a new refrigerator) that costs $1000. You’d like to purchase the refrigerator within the next six months. Dividing the $1000 by 6 months, you would need to set aside roughly $170 a month or about $43 a week to achieve your goal.

It may be more difficult to establish the longer term goals such as those for retirement but as time goes on and your income increases, you can gain more perspective about how much you need to save to achieve goals for the future. Short term goals may be easier to figure out. You can start with an emergency fund if you can’t afford multiple kinds of savings plans. Try to save up 6-12 months of living expenses to get going.

Make Your Changes

Your savings plan needs constant care and upgrading much like your budget. If you consistently work towards fine-tuning your goals and distributions of monies, you will likely achieve success financially with all of your goals. Goals will also change in priority depending on daily life and financial needs so keep up with your plan and keep it active.

Photo credit: vintageamanda

Related Articles:

1. How to Save Extra Money for Children’s Savings Accounts
2. The Most Important Financial Goals for 2010
3. 2009 Personal Finance Goals and Resolutions

~$~