Budgeting: Just One Thing To Do

You might think our one task for May would be to create a budget, since it’s budgeting month. But the truth is creating a budget isn’t really a quick task you can take care of in under an hour. (We’ll go into more detail next week on how to create a budget from scratch and why it’s so valuable.) Instead, we’re talking about a type of budgeting that keeps you from having big surprises at tax time: withholdings.

This month’s one task is to review and update your W-4. Most of us filed our taxes last month, so the time is right to make sure your estimated tax payments (called “withholdings”) are accurate. Your W-4 acts like a budget for your estimated tax payments throughout the year. It tells your employer how much federal income tax to withhold from each paycheck. This ensures you avoid a large tax bill come filing time and keeps your finances on track. Here’s how to do it.