Month: April 2025

What I Wish I Learned in School 4 of 12: Taxes Demystified

Taxes can seem daunting, especially when you’re just starting out. Here’s everything about taxes you wish you’d learned in school.

1. Taxes are inevitable

The first thing to know is that taxes are a part of life. Whether you’re earning a paycheck, running a business or investing, you’ll interact with the tax system. The key is to be informed and organized.

2. Your paycheck doesn’t show the whole picture

If you’ve ever wondered why your take-home pay is less than your salary, taxes are the answer. Employers withhold income taxes, Social Security and Medicare from your paycheck. This is called “pay-as-you-go” taxation.

Review your W-4 form when you start a new job or when your financial situation changes. This form determines how much federal income tax your employer withholds. Claiming too many allowances could lead to a big tax bill in April, while too few may mean you’re overpaying.

3. Tax deductions and credits are your friends

One of the most confusing aspects of taxes is the difference between deductions and credits:

  • Deductions lower your taxable income, which reduces the amount of tax you owe.
  • Credits are even better because they directly reduce the amount of tax you owe.

Learn which deductions and credits you qualify for.

4. Filing isn’t as scary as it seems

Gather all your important documents:

  • W-2s from your employer(s)
  • 1099s for freelance work or investment income
  • Receipts for deductible expenses
  • Records of charitable donations

Next, choose a filing method. You can use tax software or hire a professional.

5. Keeping records is crucial

The IRS recommends keeping tax-related documents for three years. This includes:

  • Pay stubs
  • Bank statements
  • Tax returns
  • Receipts for deductions

Keep these documents in a safe place for easy access.

6. Understand the difference between a refund and a bill

Getting a tax refund may feel like a bonus, but it means you paid more in taxes than you owed. On the flip side, owing taxes at the end of the year can be stressful. To avoid surprises, adjust your withholding or make estimated tax payments if you’re self-employed.

7. Retirement accounts offer tax advantages

It’s important to know how powerful retirement accounts are for saving on taxes. Contributions to traditional IRAs and 401(k)s are often tax-deductible, reducing your taxable income. Roth IRAs don’t offer an upfront deduction, but your withdrawals in retirement are tax-free.

Taking advantage of these accounts can help you build wealth while lowering your tax burden.

8. State taxes matter, too

Most states have income taxes, and each state has its own rules and rates. Research your state’s tax laws to avoid surprises and plan accordingly.

9. Deadlines are non-negotiable

The IRS tax filing deadline is typically April 15, but it may vary if on a weekend or holiday. Missing this deadline can result in penalties and interest on any taxes owed.

Use this guide to learn all about taxes.

6 Ways to Spring-Clean Your Savings

Time to get started on some spring cleaning! Remember to include your finances as part of your decluttering and tidying up. Well-organized money management can help you reach your saving goals. Here are six ways to spring clean your savings and make sure your financial goals are on track.

1. Organize your financial goals

Start by revisiting your financial goals. Have they changed since you last reviewed them? Refocusing your goals will help ensure your savings align with current needs and future aspirations.

2. Polish your savings accounts

Take a close look at your savings accounts. Evaluate the following:

  • Interest rates. Consider switching to a high-yield savings account or a credit union account that’s offering better returns.
  • Fees. Check for maintenance fees or minimum balance requirements. These can secretly erode your savings over time.
  • Accessibility. Make sure you’re not keeping all your savings in accounts that are too easy to dip into.

If you’d like to change up your savings accounts, speak to an MSR at High Point FCU to learn which account may be better for your needs and goals.

3. Spruce up your budget

Give your budget a glow-up this spring. Here’s how:

  • Track expenses. Review your spending habits and identify areas where you can cut back.
  • Adjust categories. Tweak your categories to better reflect your current reality.
  • Automate your savings. Set up automatic regular transfers from your checking account to your savings.

4. Clean up your subscriptions

Review your checking account statements or use a subscription-tracking app to identify recurring charges for services you no longer use. Canceling even a few subscriptions can free up some funds to give your savings a boost.

5. Make your emergency fund shine

No emergency fund? Or is your fund getting skimpy? Now’s the time to build it up. Aim for at least three to six months’ worth of living expenses to ensure you don’t need to dip into savings when the unexpected happens.

6. Dust off your debt

List your debts, including balances, interest rates and minimum payments. Then, choose a repayment strategy. You can go with the snowball method, in which you pay off the smallest debts first to build momentum, or with the avalanche method, in which you pay off the highest-interest debts first to save on interest.

As you declutter your home this spring, don’t forget to spruce up your savings, too! Use these tips to get started.

The 5 Golden Rules of Smart Money Habits Every Teen Should Know

Money is a big part of life, but it doesn’t have to be complicated. The earlier you learn how to handle it, the better off you’ll be in the future. Whether you’re saving for a cool gadget, your first car or just trying to make the most of your allowance, these five golden rules of smart money habits will set you up for success!

1. Spend less than you earn

It’s simple: If you spend more than you make, you’ll always be short on cash. Even if your earnings come from babysitting, mowing lawns or weekly allowances, it’s important to spend less than you earn.

Start by tracking what you earn and what you spend. If you’re spending too much on snacks or gaming subscriptions, look for ways to cut back. By keeping your expenses lower than your income, you’ll always have money for what matters most.

2. Save before you spend

Here’s a golden rule: pay yourself first! This means setting aside some of your money for savings before spending it on anything else. Even small amounts, like saving $5 out of $20, can add up over time.

Think of your savings as planting seeds. The more you plant, the more your money will grow, until you have enough to buy something you’ve always wanted.

3. Understand the power of compound interest

Compound interest is your BFF when it comes to growing money. Compound interest happens when your savings earn interest, and then that interest earns even more interest.

For example, if you put $100 in a savings account with a 5% annual interest rate, you’ll have $105 after a year. In the second year, you’ll earn interest on $105 instead of just $100. After a while, this adds up in a big way.

4. Know the difference between wants and needs

This rule can be tough, especially when there’s a new pair of sneakers or the latest video game calling your name. But learning to separate wants (things you’d like to have) from needs (things you must have, like food or school supplies) is essential.

When you get money, and you’re considering a purchase, ask yourself: “Do I really need this, or do I just want it?” It’s okay to spend on fun things sometimes, but make sure your needs are covered first—and try not to blow all your money in one go.

5. Set financial goals

What do you want to achieve with your money? Whether it’s saving for a concert ticket, a new phone or a long-term goal like college, setting clear goals will help you stay motivated.

Write down your goals and break them into steps. For example, if you need $200 for a gaming console, figure out how much you need to save each week to reach your goal by your deadline. Watching your savings grow is super satisfying!

So, next time you get your allowance or earn some cash, remember these tips. You’ve got the power to make your money work for you — starting today!

Video Banking