Every year, more than 147 million Americans, just like you, file federal tax returns, according to the Tax Policy Center. We often hear how much people dread searching through their files to locate their mortgage, retirement, and investment account statements. But, gathering your records for tax season can also be an excellent opportunity to evaluate your income and expenditures. In other words, tax season is a great time to give the household budget a checkup. Here are some tips we’ve compiled over the years that may be helpful.

• Create Some Categories - Start by dividing expenses into unique categories, like ones for home, auto, food, and entertainment expenses. Don’t forget savings and investments as well.
• Follow the Money - Go through all the receipts and statements you gathered to prepare taxes and track everything. Be as specific as possible, from large expenditures down to your morning coffee.
• Determine Expected Income - Add together all sources of income. Make sure to use net income.
• Do the Math - It’s time for the moment of truth. Subtract projected expenses from expected income. If expenses exceed income, it may be necessary to consider changes. Prioritize categories and look to reduce those with the lowest importance until the budget is balanced.

Even though tax season can be a pain, this really is a great opportunity to give your household budget a thorough checkup. We hope you will feel better after evaluating your finances and getting a jump start on a productive year!

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this content, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for you or your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Allos Investment Advisors, LLC

The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.  

Published for the blog on March 4, 2020.