Four Smart Tips for Building Retirement Savings

Tips for Building Retirement Savings

Saving for retirement is one of those topics many people shy away from. Do any of these reasons/excuses sound familiar? “It seems so far away … It’s overwhelming to think about … I don’t make enough money to save … I’m too young … I’m too old.”

Despite the length of your countdown to retirement, there is always time to add to your savings. After all, more is better, right? To capitalize on the time you have left before retiring, consider these four tips to enlarge your nest egg, decrease some of your worries about retirement income and perhaps even improve the quality of your life during retirement.

Set a Goal

Like any other life event that requires saving money, you need to know how much you’ll need. In other words, establish a goal. Investment advisors, friends, relatives, and even some websites will offer their advice on setting your retirement savings goal. However, only you know what kind of lifestyle you would like to maintain in retirement. And living a particular lifestyle requires an individualized budget. For example, those who wish to travel in retirement will require more savings compared to those who plan to grow backyard gardens and spend time with grandchildren. Whatever you choose, begin with the end in mind and set a realistic goal based on your individual retirement needs.

Start Saving Soon

The earlier you can begin saving, the better off you’ll be now and when it’s time to retire. The reason is that by starting early (age 18 -22), you can save a smaller amount of money each month over a longer period of time as compared to someone starting later (say, in their 40s) who has fewer years before retiring. There are plenty of examples of people beginning their retirement savings as early as age 14 while working their first job. To keep the savings hill from becoming too steep, begin as early as possible – today if possible!

Find the Money

For those wondering where to find the money to save for retirement, look around you! If you currently work for a large or mid-sized company and you’re not already participating in your employer’s 401k or other retirement savings plan, sign up right away. Many employers offer matching contributions, which is free retirement money. Additionally, consider automatically depositing 10 percent of your pay – or even better, 15 percent – each payday to a retirement savings account. Other sources for filling your retirement coffers include your annual tax refunds and money earned from a second job. Some companies now offer part-time employees ways to save for retirement including IRAs, money market accounts and stock purchase plans. So, consider a second job to build up your retirement savings.

Just Do It

With a goal, timeline and funding sources lined up, you can begin paving the way to retirement with more savings than you had at the start. Nevertheless, remember that wise counsel from experienced professionals can help uncover possible bumps in your road to retirement. If you could use some assistance mapping out your retirement savings plan, an excellent resource is an experienced accountant like those at Donohoo Accounting. Schedule your retirement savings consultation with Donohoo by calling 513-528-3982 or email us today.

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Four Tips To Save For College

Depending on grades a great score on the ACT or SAT, your future college student could have a big scholarship in his or her future. If you – and your student – haven’t been saving for college, how can you save as much as possible before the first tuition bill arrives? Whether you have a short amount of time or a decade, these four tips will give you a start on how to save for college.

Start with a goal

A college savings goal consists not only of a dollar amount but also includes a date or deadline. The most common way to compute a college savings goal is to divide the total dollar amount needed by the number of years you have to save. Another popular goal-setting method is to multiply the student’s age by $2,000. This will give you roughly the amount you should have in savings to cover 50 percent of the student’s college expenses.

Use the 10 percent rule

Could you live on 90 percent of your household income for a period of time? Probably so. Most people could, simply by looking for ways to reduce their spending. While you budget to live on 90 percent of your take-home pay, the other 10 percent goes into an educational savings account (ESA), 529 college savings account or even an interest-bearing savings account (or some combination of these). Depending on your total household income, 10 percent a year could add up to quite a bit between now and the start of college.

Save income from part-time or summer jobs

Even better than the 10 percent rule is the 100 percent rule – but only make it apply to income earned from part-time or summer jobs that your student works. A student earning $8 an hour working year-round in a part-time job can earn up to $8,000 during a single year. That’s a sizeable contribution toward college expenses! Parents can double that amount by offering to match dollar-for-dollar the amount their student saves each year.

Sell unused and unwanted items

Collectibles, antiques and even used appliances have the potential to bring in a handsome sum when sold online or in yard sales. Put your family and relatives to work scouring their attics, basements, and garages for anything of value that can be sold to add to your college savings account. The more unused or unwanted items you can sell – even for small dollar amounts – will eventually add up to help meet college expenses.

Need help developing your college savings plan? Donohoo Accounting can get you started. Contact us today to schedule your free consultation or call 513-528-3982.

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5 Ways to Make Yourself Save Money

We’re all good at something, but not everything. And saving money is one of those things that lots of people say they’re not good at doing, But, what if saving money didn’t require lots of “doing?” What if it required only a little effort and almost no time? What if saving money could be built into your current lifestyle? If this sounds good to you, there are at least five ways to save money that require low commitment on your part, but which have the potential to yield bigger rewards than your current efforts to save money.

Sell old items and bank the money

Most people look at their income and reason that they simply don’t have enough money to pay the bills, live and save. Let’s assume that’s true, and so we’ll look somewhere else for money to save besides your paycheck. Look to the items you have stored around your house that are going unused and consider their value if you sold them. Attics, basements, garages and storage lockers are the primary places for valuable — and unused — items to end up. Selling these items online or in a yard sale affords the potential to bring in hundreds of dollars that don’t have to come out of your paycheck to go into your savings account.

Collect and store change

Another way to save money without going directly to your income source is to collect and store change when you make cash purchases. Get a large container, such as a popcorn tin. Every time you feel coins jingling in your pocket or in your purse, throw them in the tin and close the lid. Every now and then, throw a dollar bill in there or a $5 bill. When the tin is full and you count your savings, you may be surprised by how much you’ve saved!

Round up purchases and save the difference

Much like saving coins, a great way to save without feeling too much of a pinch is by using a personal finance app that rounds up your online purchases to the nearest dollar, and then saves the overage to your savings account.

Make a “dream” board

Saving money should always include a goal, so why not make the goal – or dream – come true? Create a dream board that features photos of the item or occasion for which you’re saving. Hang your dream board in an obvious place where you’ll see it every day to remind yourself why you’re saving. Every time you look at the board, put a few dollars aside. Or,when you’re budgeting, look at the dream board to motivate yourself to sock that money away!

Make saving a priority

Whichever one or more methods you choose, you must make saving money a priority if you truly have a desire and a reason to save. Look for additional ways to save,such as using coupons, delaying unnecessary purchases, paying cash instead of using credit, and all the other go-to ways of saving that your parents or grandparents used. In the long run, they’ll free up additional dollars for you to put in the popcorn tin or the savings account and they’ll help you acquire the things you have on your dream board.

Need help managing your finances? Donohoo Accounting Services is a professional accounting services provider, dedicated to helping our clients overcome their financial challenges. To learn more about how Donohoo Accounting Services can help, call us today at 513-528-3982 for a free consultation.

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What You Need to File Your Business Taxes

What could be difficult about filing this year’s business income tax return?Plenty. Not to worry though, Donohoo Accounting Services is here to help! Every business has unique ways to best prepare taxes and you’ll need an accountant to help find all your deductions, but here are some tips about the three kinds of records your accountant will definitely need.

Income/Earnings Records

Because most businesses use electronic means to capture every transaction of the sale of goods or services, income records should be easy – though perhaps voluminous – to collect. Be sure to review your business’s income records, however, to look for any obvious errors such as missing information. Complete income records should include:

• The gross amount of each individual sale,
• Any returns or discounts credited against your business’s income,
• Interest earned from business bank accounts (from your year-end bank statement or Form 1099-INT) and,
• Any other income from non-sales sources.

Documentation of Expenses

Perhaps the most documentation required for your businesses tax filing falls into the category of expenses. You must account for more than a dozen different kinds of expenses on your tax form. These include all employee wages, rent or lease payments (including vehicle leases), insurance, travel, office supplies,and advertising and communications (such as telephone, fax and Internet). Additionally, within these expense categories there are sub-categories. Be sure to consult with a tax professional for a complete list of expense categories to be sure you don’t overlook any potential deductions.

Inventory Details

If your business maintains a physical inventory of goods, you will need to have documentation of your inventory totals at the beginning and end of the year along with its dollar value. As well, be sure you also have records of any inventory purchased over the course of the year. Remember to account for any inventory items that were used for business or personal needs, and the value of any supplies or materials on-hand that were purchased to operate the business. For businesses that track inventory electronically, these records should be easy to access. But again, remember to check – and correct – any errors or irregularities between your inventory records and your actual physical inventory.

The professionals at Donohoo Accounting Services have been helping small businesses file annual tax returns for more than 20 years. For a free consultation, call Donohoo Accounting today at 513-528-3982. Check us out on Facebook, Twitter and LinkedIn for our latest updates and tips!