(BPT) - So, you’re in your 20s, and everything's changing — you finish college, start working, rent an apartment — and the list goes on. Becoming an adult means accomplishing many milestones, without a manual. "Adulting" often means learning to manage your finances as you make your way through life.
Here’s a guide to some key "adulting" milestones.
Transitioning health insurance
If you’re 26 or younger, you may still be on your parents’ health insurance. But if you’re not, especially for those over 26 or with a job that offers benefits, there are some key things to consider:
Filling out a W-4
It is important to understand that you pay income taxes in two ways: through withholding on your paychecks and when you file your taxes each year. Most people focus on the refund, but you don’t want to forget about your paycheck. It’s a personal decision if you want the most amount of money in your paycheck throughout the year or if you want a big refund in one lump sum.
The information you put on your W-4 and share with your employer determines your withholdings during the year. You can use H&R Block's W-4 calculator to see how adjustments to your withholdings can impact the refund you want at tax time — or put more money in your pocket now. H&R Block tax professionals also provide W-4 assistance for their clients. Because a W-4 form requires a lot of the same information that goes on a tax return, and because updating a W-4 at the start of the year stretches out the changes over a longer period, tax filing is the perfect time to update your W-4.
Filing your taxes
The first time you file your taxes can seem intimidating. Fortunately, there are plenty of tools to make filing easier, and to ensure it is done correctly.
Here are some key questions to consider before you start.
"Developing confidence as an adult has a lot to do with learning to handle your finances," said Karen Orosco, senior vice president at H&R Block. "Taxes can play a big part in how you’ll feel about your finances for the year. At H&R Block, we know you have a unique tax situation. So, whether you have us file for you or you file your taxes yourself, you can decide how much help you need from one of our tax pros and you can access that help online or in-person.”
Along with doing your taxes comes developing financial independence. Key strategies to becoming more financially stable is learning how to budget, paying down debt, and establishing an emergency fund — so you're not living paycheck to paycheck.
Budgeting means calculating (and writing down) how much money you've got coming in, and how much is going out. You should list out all necessary expenses, such as:
You should then determine which of your expenses are discretionary, like:
Compare your monthly expenses against your income. If your "outgo" exceeds your income, you'll need to earn more and/or spend less. Consider a side hustle for additional income or determine where to trim unnecessary expenses.
Getting married? Congratulations! Wedded bliss brings an influx of decisions, like where to live and how to handle your money. Do you want individual bank accounts or a joint account? When it's time to file taxes, should you file separately or jointly?
Every person and every married couple has a unique tax situation. There may be many reasons to file taxes jointly, and some to file separately (like if your spouse has defaulted on student loans or owes back taxes). Talk to an H&R Block tax pro to see what options are best for you.
"Every step of adulting brings change, generates many questions and creates uncertainty," said Orosco. "The good news is you can choose to work with H&R Block year after year. We get to know you and your own personal tax situation, plus understand the milestones in life. We can help find every credit and deduction you're entitled to with each new milestone."