How to Open a Bank Account

Learn the essentials of opening your first bank account, whether you’re a student, headed to college or starting a job. This video offers a guide on choosing the right bank, understanding account types, mastering digital banking, and exploring top financial apps for budgeting and investing.

How to Open a Bank Account

How to Open a Bank Account

Hello everyone. Today we’re discussing a rite of passage in the financial world: opening your very first bank account. Whether you’re a student, off to college, gearing up to start your first job, or just taking control of your finances, this is for you!

The Importance of a Bank Account:
First off, why bother? Well, having a bank account is about more than just having a place to stash your money. It’s about managing your funds, starting a savings habit, and gearing up for financial independence. It’s the first step to understanding how money works in the adult world.

Types of Bank Accounts:
There are a couple of main types of accounts that you might want to consider:

Regular Checking Accounts: This is the account you’ll use most often. From depositing your paychecks, paying bills, to buying that concert ticket, this is where the action happens.

Savings Accounts: Think of this as your financial vault. It’s where you put money away for future goals, emergencies, or just to earn a little interest over time.

Now, the big question – Traditional Bank or Online Bank?
Brick-and-mortar banks are everywhere, and they offer the benefit of personal interaction. Having issues? Just walk in and talk. But online banks, with their reduced overhead costs, often provide better interest rates and fewer fees. Plus, with everything moving digital, the convenience of handling your finances from your phone or laptop is undeniable.  Though brick-and-mortar also offer online banking services along with their traditional banking.

What You Need to Open an Account:

  • Identification: Most banks will need two forms. This could be a driver’s license, passport, or even your student ID.
  • Social Security Number: Absolutely non-negotiable. It’s for verification and tax reasons.
  • Proof of Address: If you’re in a dorm, a letter from your college might work. Otherwise, utility bills or your lease can do the trick.
  • Initial Deposit: Not always, but some banks might ask you to deposit a certain amount to kick things off.

But don’t rush to the first bank you see. Do your homework. Browse bank websites and compare features.
Look for student or youth discounts or benefits. Remember, fees can eat into your money. So, whether it’s monthly charges, ATM fees, or transaction charges, stay informed.

Alright, once you’ve chosen your bank and opened an account, you’re not done! Here’s where the real work starts. Get familiar with the mobile app or online banking platform. They’re packed with features!
Activate email or text alerts for things like low balances or large withdrawals. It keeps you in the loop without logging in every time.

Your debit card is a direct link to your funds. Handle it with care. Memorize your PIN. Don’t write it down or share it. Also, track your purchases. This helps with budgeting and ensures there’s no unauthorized spending. Now, there are plenty of third-party apps out there that link to your bank account. These apps can help you budget, save, invest, and even split bills with roommates or friends.

Lastly, here’s an important suggestion for you: make it a weekly ritual to review your bank account. Ensure you know what’s coming in and going out. This simple habit can be the difference between a comfortable bank balance and nasty overdraft fees.

And with that, we’ve covered the basics of opening and managing your first bank account! Remember, the choices you make now set the tone for your financial future. So, educate yourself, ask questions, and be proactive. Your future self will thank you.

Lesson Resource

Categories Banking, Earning Money
 Tags ,
Leave a comment

Budgeting for School Supplies | Step-by-Step Guide

A guide to mastering budgeting for school supplies for students by understanding financial priorities, tracking expenses, and seeking cost-saving strategies.

Budgeting for School Supplies

Budgeting for School Supplies

Today, we’re venturing into the world of budgeting, using something students all need: school supplies.

Now, let’s talk about budgeting. Think of it like the GPS for your money. You wouldn’t start a road trip without knowing your destination, right? Budgeting helps you reach your financial goals without unexpected detours.

First off, you need to figure out how much money you have available. This could be from your allowance, savings, a part-time job, or maybe from your parents. Once you have that number, we can start our budgeting financial journey.

Grab a piece of paper, or open up a note on your device, and jot down everything you might need for the school year. Yep, from those crucial textbooks to that super cool backpack with all the pockets.

Got your list? Great.  Now, without even realizing it, you’ve already set your financial priorities. There are things on that list you absolutely need, things that would be nice to have, and things that are, let’s admit it, just for the swag. This is the essence of budgeting: knowing what’s a must-have, what’s a luxury, and what falls somewhere in between.

Before you start buying, here’s a pro tip: do a little detective work. Compare prices online, consider if second-hand options are feasible, and always keep an eye out for student discounts. A little research can save you big bucks.

And here’s another golden rule: keep track of what you spend. Every time you buy something, note it down. This will prevent you from accidentally overspending and will give you a clear picture of your finances.

Now, I know things don’t always go as planned. Maybe that art set is pricier than you thought. That’s okay! Budgeting isn’t about sticking rigidly to a plan; it’s also about adapting when needed.

Also, remember you’re not on this journey alone. Talk to your friends and classmates. There might be opportunities to buy in bulk and share costs or swap items. Sharing is, after all, caring (and saving!).

Once all your shopping’s done, take a step back. Look at what you spent and compare it to your initial list. This reflection is crucial because each time you budget, you get better at it.

So, remember this isn’t just about getting ready for school. It’s about preparing you for life. Budgeting is a skill, and like any skill, the more you practice, the better you get. And remember: every dollar has a purpose. Make sure it serves you well.

Lesson Resource

Categories Budgeting, Saving Money
 Tags , , ,
Leave a comment

Student Loans 101 | The Basics Every Student Should Know

Learn about student loans, distinguishing between federal and private options, and understanding repayment strategies. Gain knowledge on making informed decisions for education financing and avoiding potential pitfalls.

Student Loans 101

Student Loans 101 – The Basics

Student loans are often the first significant financial decision that many people make. They’re seen as an investment in your future—a way to pay for a degree that will lead to a well-paying job. But what many young people don’t realize is that they can also turn into a huge burden.

A student loan is money you borrow specifically to pay for college, and they come with interest rates and terms for repayment. You can get student loans from the federal government or from private sources like banks, credit unions, and even from some colleges themselves.

Now, federal loans typically have lower interest rates and more flexible repayment terms than private loans. The interest rates are fixed, meaning they don’t change over time. Private loans, on the other hand, may have variable rates that can increase over time, and the terms are set by the lender, not the government.

Different types of federal student loans

There are three main types: Direct Subsidized, Direct Unsubsidized, and Direct PLUS loans.

Direct Subsidized loans are for undergraduate students who demonstrate financial need. The government pays the interest on these loans while you’re in school, and for the first six months after you leave school.

Direct Unsubsidized loans, however, accrue interest while you’re still in school. This means you’ll owe more than you originally borrowed when you start repayment. These loans are available to undergraduate, graduate, and professional students.

Direct PLUS loans are available to graduate or professional students, and parents of dependent undergraduate students. These loans have higher interest rates and origination fees.

But here’s a key point – you should always exhaust your federal loan options before even thinking about private student loans. Federal loans offer more protections and flexible repayment options.

Repayment
The standard repayment schedule for federal student loans is 10 years. However, there are also income-driven repayment plans, which cap your monthly payments at a certain percentage of your income. If you’re having trouble making payments, look into these options. Do not just stop paying – that’s a fast track to default, and you do not want to default on a student loan.

Should you even take on student loans in the first place?

My general advice is: no. If at all possible, try to avoid student loans. Look for scholarships, grants, work-study opportunities, or consider starting at a community college.

Remember, debt is always a risk. It’s a risk that the degree will pay off, that you’ll be able to make the payments, that you won’t face financial hardship. Student loans are no exception.

In closing, let me leave you with this. Don’t make the mistake of viewing student loans as the only way to achieve your educational goals. Yes, education is a valuable investment in your future, but it’s not worth a lifetime of debt.

Before taking out any loan, make sure to weigh all your options, understand the terms, and have a clear plan for repayment. And if you’re already in student loan debt, remember, there is always a way out. It may require sacrifice and hard work, but it’s possible.

Lesson Resource

This material has been prepared for educational and informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or investment advice.

Categories Debt & Credit, Education
 Tags
Leave a comment

What is the W4 Tax Form?

Learn what the IRS W-4 Form is used for and its impact on your paycheck and annual taxes. Insights for new employees on accurate form completion, the significance of updating it with life changes, and strategies to manage yearly tax obligations effectively.

What is the W4 Tax Form?

W4 Tax Form

A very important document that you’ll encounter if you have a job in the US is the IRS W-4 Form, also known as the Employee’s Withholding Certificate.

Why should you care about the W-4 form? Simple. It directly impacts how much money you take home in your paycheck and how much you pay in taxes. That’s right – this form is all about your hard-earned money, so it’s worth understanding it fully.

When you start a new job, one of the first things your employer will ask you to do is fill out a W-4 form. This form is used by your employer to determine the amount of income tax to withhold from your paycheck. The information you provide on the form is crucial because if you end up having too much tax withheld, you will get a tax refund at the end of the year. However, if you have too little tax withheld, you might end up owing money when you file your tax return.

Importance of updating your W-4 form
Life changes, and so do your taxes. For instance, if you have a child, get married, get a second job, or go through a divorce, you need to update your W-4 form. Why? Because these changes can significantly impact your tax situation.

Also, it’s crucial to understand is that the W-4 form doesn’t dictate how much you’ll pay in taxes – it only determines when you’ll pay them. Whether you get a refund or owe money at tax time doesn’t change your overall tax bill. It just shifts when you pay.

However, there are potential penalties for under-withholding. If too little is withheld, you will owe taxes at the end of the year and potentially face a penalty for under-withholding. If too much is withheld, you will receive a refund.

The goal for many people is to adjust their W-4 so the amount withheld from their paychecks will come as close as possible to their actual tax liability for the year. However, some prefer to have more withheld and receive a refund as a form of forced savings. Conversely, others might prefer to have less withheld to receive more money in their paychecks during the year, understanding that they will owe money come tax time.

So how do you fill out a W-4 form? Be sure to check out our video on how to fill out the form.

This material has been prepared for educational and informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or investment advice.

Categories Taxes
 Tags ,
Leave a comment

What is Accounting? An Introduction.

Learn the core principles, definition, and purpose of accounting, including its role as the language of business, the fundamental accounting equation, and the distinction between financial and managerial accounting.

What is Accounting?

What is Accounting?

At its most basic level, accounting is the process of recording financial transactions pertaining to a business. It involves summarizing, analyzing, and reporting these transactions to oversight agencies, regulators, and tax collection entities. Sounds pretty simple, right? But there’s so much more to it than that.

Accounting is often referred to as the “language of business” because it communicates the financial health of a business to its stakeholders. This includes investors, creditors, management, and regulators. Without accounting, it would be nearly impossible for these stakeholders to make informed decisions about the business.

Essentially, accounting revolves around two basic things: revenues and expenses. Revenues are the earnings from the company’s business activities, while expenses are the costs incurred to earn these revenues. The difference between revenues and expenses is the net income or loss, which shows if a business is profitable or not.

Accounting also involves dealing with assets, liabilities, and equity. Assets are resources owned by the company that have future economic benefit, while liabilities are the company’s financial obligations or debts. Equity, often called owner’s equity or shareholder’s equity, represents the residual interest in the assets of an entity after deducting liabilities. So when you hear the accounting equation: Assets = Liabilities + Equity, it’s really just showing you where a company’s resources come from, either from creditors (liabilities) or from the owners (equity).

Now, in the world of accounting, there are two main types we need to discuss: financial accounting and managerial accounting. Financial accounting focuses on reporting an organization’s financial information to external parties, like investors and creditors. This is done through financial statements which include the balance sheet, income statement, and cash flow statement.

On the other hand, managerial accounting provides information for internal decision-makers within the business. This can include anything from cost analysis, to budgeting and forecasting. Managerial accounting helps managers make strategic decisions for the future of the company.

So you might be wondering, why is accounting so important? Well, solid accounting practices allow businesses to evaluate their performance, maintain accountability, comply with regulations, make informed decisions, plan for the future, and more. Not to mention, it’s vital for tax purposes.

For individuals, understanding accounting principles can help you keep track of your personal finances and make wise investment decisions. It can give you insights into how a business is doing before you decide to invest or become a part of it.

So that’s a guide to understanding what accounting is and why it matters. Remember, accounting is more than just numbers and balance sheets—it’s also a vital system that keeps businesses accountable and informs decision making both within the company and for external stakeholders.

Lesson Resource

Categories Accounting
 Tags
Leave a comment

How Do I Donate? What is a Charity?

Learn the fundamentals of donating and charity, from understanding its importance to making informed donations. A guide to make your contributions more effective, and discover how your individual efforts, whether monetary, time, skills, or resources, can significantly impact society.

How Do I Donate? What is a Charity

How Do I Donate? What is a Charity?

The act of giving can be one of the most rewarding experiences in life, and here we’ll be exploring the concept of charity, why it’s so important, and how to go about donating to your chosen cause.

Let’s start by asking: What is a charity? A charity is a type of non-profit organization that aims to provide help and raise money for those in need. Charities can operate on a local, national, or even international level, and they can cover a wide range of issues, everything from disaster relief, poverty alleviation, medical research, education, and so much more.

Charities are important because they address areas often overlooked or inadequately addressed by the government or private sector. They bring communities together, create social bonds, and promote a sense of social responsibility. That’s why it’s so important for us to support the work of charities.
So, you’ve decided that you want to donate. That’s fantastic! But it’s not as simple as just throwing your money at a cause and hoping for the best. Giving effectively is about being informed, thoughtful, and intentional with your donations. Here’s a step-by-step guide on how to donate.

First, Identify Your Passion. This is where it all begins. You need to ask yourself, “What issues or causes are closest to my heart?” It could be anything from supporting underprivileged children, preserving the environment, or helping to find a cure for a disease. Your donations will feel much more meaningful if they align with your personal values and passions.

Next, Do Your Research. Not all charities are created equal. Some have higher operating costs than others, some have been embroiled in controversies, and others may not be legitimate charities at all. Websites like Charity Navigator, GuideStar, or the Better Business Bureau can help you assess the effectiveness, transparency, and credibility of different organizations. The goal is to ensure that the highest possible proportion of your donation is going towards the cause itself and not to overheads.

The next step is, Decide How Much To Give. As a rule of thumb, if you’re financially stable, consider donating around 10% of your income. However, the amount you choose to donate is a personal decision. Every little bit helps, so don’t feel pressured to give more than you can comfortably afford.

Next, Make the Donation. This could be as simple as clicking a donate button on a charity’s website and entering your payment information. Some charities also offer other ways to donate, like bank transfers or mailing a check.

Also, a good idea to Plan for the Future. Consider setting up a recurring donation. This can be a great way to provide ongoing support to your chosen charity. Even small amounts, when given regularly, can accumulate and make a big impact over time. Remember, giving isn’t just about money. You can also donate your time, skills, or resources. There’s a lot of ways to make a difference in the world, and every little bit helps. It’s not just about having wealth, it’s about using it wisely.

Lesson Resource

Categories Lifestyle & Culture
 Tags ,
Leave a comment

How Do I Choose a Career?

A guide on choosing a career that’s right for you. Explores self-reflection, industry research, skill evaluation, mentor guidance, internships, goal-setting, and adaptation strategies. This resource offers you invaluable tools for making informed career decisions, aligning your interests and skills with potential roles, leveraging mentorship, gaining practical experience, and fostering personal growth.

How Do I Choose a Career?

How to Choose a Career

Choosing a career is a big decision that can have a profound impact on your life, so it’s crucial to approach it with careful consideration. Here are some practical steps to help you make an informed decision about your career path.

Step 1: Self-Reflection

The first step in choosing a career is self-reflection. Take some time to understand yourself better. What are your interests, passions, and values? What are your strengths and weaknesses? Consider what activities bring you joy and fulfillment and think about the type of lifestyle you desire and how your career can align with that vision.

Step 2: Research and Exploration

Once you have a clearer understanding of yourself, it’s time to start exploring different career options. Research various industries, job roles, and educational requirements. Look for information about job growth, salary ranges, and the skills needed in each field and seek out professionals working in those fields and ask for informational interviews to gain firsthand insights.

Step 3: Evaluate Your Skills and Interests

As you explore different careers, evaluate your skills and interests in relation to each option. What skills do you possess that align with a particular career? Are there any gaps in your skills that you need to address? Consider whether you are willing to invest time and effort in developing those skills or pursuing additional education.

Step 4: Seek Guidance

Don’t be afraid to seek guidance from mentors, career counselors, or trusted individuals who can provide valuable advice. They can help you gain perspective and offer insights based on their own experiences. They may even suggest careers you haven’t considered or provide guidance on how to navigate a specific industry.

Step 5: Try It Out

Sometimes, the best way to determine if a career is the right fit is to try it out. Consider internships, part-time jobs, or volunteer opportunities in fields that interest you. This hands-on experience will give you a taste of what the job entails and help you make a more informed decision. Remember, it’s okay to explore multiple paths before settling on one.

Step 6: Set Goals and Create a Plan

Once you have a better idea of the career you want to pursue, it’s time to set goals and create a plan. Identify the steps you need to take to reach your desired career, such as acquiring specific skills, obtaining relevant certifications, or pursuing higher education. Break your goals into smaller, actionable steps, and create a timeline to keep yourself accountable.

Step 7: Take Action and Adapt

Now it’s time to take action! Start working towards your goals, knowing that your path may not be linear. Be open to adapting and making adjustments along the way. Your interests and priorities may change over time, and that’s perfectly normal. Embrace the journey, learn from setbacks, and continue to grow both personally and professionally.

Choosing a career is a significant decision, and it’s natural to feel some uncertainty. Remember that it’s a process, and it’s okay to explore different options before finding the right fit. Embrace self-reflection, research, and seeking guidance to make an informed decision. And most importantly, be open to new opportunities and stay committed to personal growth.

Lesson Resource

Categories Careers, Earning Money
 Tags , ,
Leave a comment

What is a Debit Card? How to Use It?

Learn banking basics and the essentials of debit cards: how they function, their benefits and drawbacks, and tips for wise usage. Also, gain knowledge to enhance your financial health by managing your debit card use responsibly.

What is a Debit Card and How to Use It

What is a Debit Card?

A debit card is a card issued by your bank that allows you to access and use the money in your bank account. It’s linked directly to your account, so when you use it, you’re spending your own money, not borrowing like you would with a credit card.

Here is an example. Suppose you have $500 in your checking account. You go to a store, pick up a pair of shoes that cost $50, and use your debit card to pay. That $50 is deducted directly from your account, leaving you with $450. No bills, no interest, you bought it outright. It’s your money in, and your money out.

The key thing to remember here is that a debit card is NOT a credit card. When you use a credit card, you are borrowing money from the bank, and you’ll need to repay it, possibly with interest. With a debit card, it’s like using digital cash.

Now, why use a debit card instead of carrying cash around?

Firstly, for convenience. Debit cards are easier and safer to carry around than a wad of cash. They’re accepted almost everywhere, and you can use them to make purchases online, pay bills, and withdraw cash from an ATM.

Secondly, it’s about financial control. With a debit card, you can only spend what you have in your account. This can be a great tool to manage your spending and help to prevent you from getting into credit card debt.

However, as with any financial tool, debit cards have their downsides. One of the biggest issues is that if your card gets stolen, or your information gets compromised, thieves can potentially drain your checking account. Most banks offer some protections, but it might take a bit of time to get your money back.

Another drawback is that unlike credit cards, debit cards do not help build your credit history. So, if you’re planning to apply for a loan or mortgage in the future, responsibly using a credit card might be beneficial for your credit score, if you are smart about your finances.

Here are some quick tips for using your debit card wisely:

  • Keep track of your spending. Use your bank’s app or online service to frequently check your account balance and transactions.
  • Protect your card information. Don’t share your card number, expiration date, or security code with anyone you don’t trust.
  • Report lost or stolen cards immediately. The sooner your bank knows what’s happening, the better they can protect your money.

Remember, a debit card is just a tool. It’s how you use it that determines whether it’s good or bad for your financial health.

Lesson Resource

This material has been prepared for educational and informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or investment advice.

Categories Banking
 Tags ,
Leave a comment

W4 Tax Withholding Steps 2 to 4 Explained 2023 

Learn to navigate IRS Form W-4, focusing on handling multiple jobs, claiming dependents, adjusting deductions and other income, and utilizing the IRS Tax Estimator tool for accurate tax withholding.

W4 Tax Withholding Steps 2 to 4 Explained

W4 Tax Withholding Steps 2 to 4

If you watched our other introduction video to the W-4, How to Fill Out the W-4, you already understand the W-4 and filled out the top of the form. Now, let’s take a look in more detail at steps 2, 3, and 4.

Step 2

Step 2 is about multiple jobs or having a spouse who works. This step is designed to help you and your employer determine the correct amount of tax to withhold from your paycheck. It’s important to get this step right because you want to avoid owing a big chunk of money to the IRS at the end of the year, or conversely, lending Uncle Sam your hard-earned money interest-free.

The options available include: a) which here says Reserved for future use, but used to say using the IRS’s Tax Withholding Estimator tool, b) use the Multiple Jobs Worksheet on page 3 and enter the result in Step 4(c) or c) check the box if there are only two jobs in total. The online estimator is still probably the most accurate option, and we highly recommend it.

The IRS Tax Withholding Estimator is an online tool that can provide you with the most accurate withholding amount based on your specific circumstances. It takes into account your income, dependents, eligible tax credits, and other factors. This tool is updated every year, and it’s the best way to make sure you’re not over or underpaying your taxes.

The IRS Tax Estimator tool is a valuable online resource provided by the IRS to help you accurately fill out your Form W-4. This tool can be a game-changer when it comes to financial planning and avoiding any unwelcome surprises during tax season.

So, how do you use this tool? It’s a pretty straightforward process.

1. Go to the IRS website and find the Tax Withholding Estimator. We will include the link in the video description. It’s completely free to use.

2. Once there, you’ll find that the tool asks a series of questions about your income, filing status, dependents, and anticipated deductions and credits. It’s a good idea to have your most recent pay stubs and most recent income tax return handy to help answer these questions accurately.

3. After you’ve input all your information, the tool will estimate your tax liability for the year and suggest how to fill out your Form W-4 to have the correct amount of tax withheld.

Please note that the tool is only as accurate as the information you provide, so be as precise and thorough as possible.

Now, remember, the IRS Tax Estimator tool is not a replacement for professional tax advice. It is a starting point, a tool in your financial toolbox that can help you better manage your paycheck and your withholding. But each person’s tax situation is unique, and you should always consult with a tax professional if you have questions or concerns.

Step 3

Next, we have Step 3, where you claim your dependents. If you’re not sure who qualifies as a dependent, the IRS has a tool called the “Interactive Tax Assistant” that can help you.

Step 4

Step 4 is optional, but it helps further adjust your withholding. It consists of three parts: 4(a), 4(b), and 4(c).

4(a) is where you can input other income not from jobs, like interest, dividends, and retirement income. This isn’t where you put income from other jobs – that was Step 2.

4(b) is for deductions. If you plan to claim deductions other than the standard deduction on your tax return, you can enter them here. This may include items like student loan interest, mortgage interest, or charitable contributions.

Finally, 4(c) is extra withholding. This is where you put any additional tax you want withheld from each paycheck. This is where the result from the Multiple Jobs Worksheet would go if you used that instead of the online estimator.

Completing the Form W-4 can seem confusing, but taking it step by step can help simplify the process. Remember, your aim is to get your withholding as accurate as possible. It’s not about getting a big refund; it’s about paying the right amount of tax throughout the year. One final word of advice: If you go through major life changes, like getting married, having a child, or changing jobs, it’s a good idea to revisit your W-4. These changes can have a big impact on your tax situation.

Resources

  • IRS Form W-4 – Employee’s Withholding Certificate and Instructions

This material has been prepared for educational and informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or investment advice.

Categories Earning Money, Taxes
 Tags
Leave a comment

How to Fill Out an Exempt W4 Form | 2023

Learn and explore the concepts of Tax Exemption and the W-4 Form. Step-by-step instructions on how to claim exempt from withholding on the IRS W-4 form for employees.


How to Fill Out an Exempt W4 Form

How to Fill Out W4 Exempt

The term tax-exempt refers to income or transactions that are free from taxes. This could apply to certain types of income, organizations, or even people under specific circumstances.

For individuals, tax-exempt status often refers to the ability to exclude all or some of your income from taxation, meaning you would owe no taxes on that income. Now, that sounds great, doesn’t it? But before you get too excited, it’s important to understand that this status is not universal. It depends heavily on specific circumstances and requirements.

Tax-exempt Status

In terms of withholding, a tax-exempt status can be claimed on your W-4 form if you had no tax liability last year and expect to have no tax liability this year. This usually applies to certain low-income individuals, some retirees, and students, among others.

Remember, this doesn’t exempt you from other payroll deductions like Social Security and Medicare. These are separate from your income tax and will still be deducted from your paycheck.

IRS W-4 Form

Now, let’s move on to the IRS W-4 form. This form is used by your employer to determine the amount of income tax to withhold from your paycheck. The information you provide on this form directly affects the size of your paycheck and the amount you may either owe or get refunded when you file your annual tax return.

How to Claim Exemption on W-4

So, how do you claim exempt on your W-4 form? Well, it’s fairly simple. First, you’ll need to fill out step 1: Personal Information. This includes your name, address, and  Social Security Number. The next part to pay attention to if you’re claiming exemption is the line where you can write “Exempt.” This indicates to your employer that you meet the conditions mentioned earlier and no federal income tax should be withheld from your pay.  To do this, write “Exempt” on Form W-4 in the space below Step 4(c).

Once you’ve filled in your personal information and written “Exempt,” you’ll need to skip down to step 5: Sign and Date the form. This is an essential step – the form isn’t valid without your signature!

Now, remember to leave the rest of the form blank. You’re claiming that you won’t have any federal income tax liability, so there’s no need to fill out sections about multiple jobs, dependents, or other adjustments.

When To Claim Exempt

But remember, you should only claim exemption from withholding if you meet the following two conditions: one, for the prior year, you had a right to a refund of all federal income tax withheld because you had no tax liability and two, for the current year, you expect a refund of all federal income tax withheld because you expect to have no tax liability.

If you do not meet both of these conditions, you cannot claim exemption from withholding.

Consequences

It’s also important to note the consequences of claiming exemption when you’re not eligible. Doing so can result in owing the IRS a sizable amount when tax time comes around, along with potential penalties and interest. This is not a situation you want to be in. Also, please remember, if you claim exempt and your income situation changes during the year, be sure to revisit your W-4 form and make appropriate adjustments. Remember, always consult with a tax professional if you’re unsure about your situation.

Resources

  • IRS Form W-4 – Employee’s Withholding Certificate and Instructions

This material has been prepared for educational and informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or investment advice.

Categories Earning Money, Taxes
 Tags
Leave a comment

What is Renters Insurance? A Beginner’s Guide

Learn about Renters Insurance, including its key coverage types, cost estimation, policy types, and the significance of risk management to best protect your assets and avoid potential financial issues when renting.


What is Renters Insurance?

What is Renters Insurance?

Whether you’re moving into your first apartment or you’ve been renting your home for years, Renters Insurance is something you definitely need to understand.

Well, Renters Insurance is a policy designed for individuals who rent their living space. Whether that’s an apartment, a house, or a condo, Renters Insurance can provide a safety net for your personal belongings and potential liabilities. You see, your landlord’s insurance policy typically covers the physical building itself – but it usually doesn’t cover your personal items inside the home or apartment. And this is where Renters Insurance comes in.

When we talk about Renters Insurance, we usually talk about three major types of coverage:

  • Personal property coverage, which protects your belongings in case of events like theft, fire, or damage from leaks.
  • Liability coverage, which covers the cost if someone gets hurt in your home, or if you or someone in your household causes damage to others’ property.
  • Additional living expenses or ‘loss of use’, which covers extra costs if your rental is damaged and you need to live somewhere else temporarily.

It’s important to understand these types because each one safeguards you in different ways.

Now, let’s talk about how much coverage you need. This will vary based on the total value of your possessions. It’s a good idea to make an inventory of your items and their estimated value to calculate how much coverage you need. Don’t forget to include things like electronics, furniture, clothing, appliances, and even smaller items. They add up!

When it comes to liability coverage, most experts recommend a minimum of $100,000. Remember, this covers not just physical injuries, but it can also cover legal expenses if someone decides to sue you.

Now you might ask, “But is it really worth it? Is Renters Insurance expensive?” Well, the good news is, on average, Renters Insurance isn’t very costly. The average cost can range from $15 to $30 a month, depending on where you live and how much coverage you need. Consider this: if a disaster strikes, replacing your belongings or covering a lawsuit could cost you thousands of dollars out of pocket. In comparison, the small monthly fee for Renters Insurance is a bargain.

But before you sign up, here’s a tip: make sure you know what type of policy you’re getting. There are two types – Actual Cash Value, which pays out the depreciated value of your items, and Replacement Cost Value, which pays the amount it would take to buy a new replacement. Naturally, the Replacement Cost Value policies tend to be a little pricier but they could be more beneficial in the long run.

Remember, like all insurance, Renters Insurance is about managing risk. It’s about gaining peace of mind and knowing you’re protected. It’s not just about protecting your stuff, but it’s about protecting yourself from potential financial pitfalls.

Lesson Resource

This material has been prepared for educational and informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or investment advice.

Categories Insurance
 Tags , ,
Leave a comment

What’s a Side Hustle? Extra Income Opportunities

Learn about starting a side hustle and how to leverage your skills, passions, and market gaps to generate supplemental income, pay off debts faster, and help secure your financial future.


What’s a Side Hustle? Extra Income Opportunities

Side Hustle Suggestion Tool

  • Side Hustle Suggestions Tool – This interactive tool is designed to help you discover a side hustle that aligns with your specific situation, interests, and needs. By providing personalized recommendations, it guides you to potential side hustles that could be a good fit for your lifestyle, abilities, and financial goals.

What’s a Side Hustle?

You might have heard the term tossed around here and there, especially in the modern entrepreneurial space. It’s become a buzzword and for good reason. A Side Hustle is any type of employment undertaken in addition to one’s full-time job. It’s a freelance or piecework nature, providing a supplemental income. Side hustles are often things a person is passionate about, as opposed to a day job that is performed for monetary gain.

Side hustles can range from freelance work to a home bakery, from selling handmade crafts online to a tutoring job. The common thread is that these are things you control, and that add value to people’s lives.

Now, you might ask, ‘Why would I consider a side hustle if I already have a full-time job?’ The reason is simple. First, a side hustle can help you pay off debt faster. That’s a big deal. Second, it can help you ramp up your emergency fund or other savings. And third, it can allow you to invest more towards your future.

The beauty of a side hustle is its flexibility. It can be as small or as big as you want it to be. It can fill a financial gap in your budget or it can explode into a full-blown business, if that’s where your passion and skill lead you.

Remember, many of the world’s largest companies started as small side projects. You might not aim to be the next Amazon or Apple, but you never know where your side hustle might lead.

So, how do you get started? Identify your skills, passions, or a gap in the market. What do you enjoy? What are you good at? What do people need? Then look at how you could monetize that. It’s not always straightforward, and it takes work, but remember, the goal here is not just to make money, but to enhance your life and financial security.

Make a plan, set realistic goals and don’t be afraid to start small. It’s not about getting rich quick. It’s about creating a sustainable, enjoyable source of additional income.

Though, keep in mind if you’re struggling to make ends meet, your focus needs to be on your main job and cutting expenses. A side hustle is a tool for accelerating your financial goals, not a lifeline for survival.  Once you’re stable with your full-time job and you’ve done a solid review of your financial situation, that’s when a side hustle can come into play. It can be your ticket to paying off your debts sooner and investing more towards your future.

But remember, while a side hustle can provide additional income, it also requires time, energy, and commitment. It’s a balancing act. Be careful not to let your side hustle compromise your full-time job, relationships, or self-care. The most successful side hustlers know how to manage their time effectively and ensure they’re not neglecting other important areas of their life.

And lastly, let’s remember this: every dollar you earn from your side hustle is a dollar that can be put towards achieving financial independence. It’s money that can be used to pay off debts, save for emergencies, or invest for the future. This isn’t just about making money, it’s about creating a better, more secure life.

So, ask yourself: What skills, talents, or passions could you turn into a profitable side hustle? How can you create extra value and earn more income in the process? The journey towards financial freedom is not a sprint, but a marathon. Every small step counts, and a side hustle might just be the next step you need to take.

Remember, it’s not about the money, it’s about your life. Having options and being able to make choices is what financial peace is all about. And a side hustle can be a powerful tool in your toolbox to get there.

Lesson Resource

This material has been prepared for educational and informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or investment advice.

Categories Careers, Earning Money, Saving Money
 Tags , ,
Leave a comment


© Copyright 2002-2024 Money Instructor. All Rights Reserved.

css.php