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Budgeting Blues

How To Make the Most of Your Paycheck

Just when you thought you couldn’t pull the corset on your budget any tighter, gas prices spike, stocks dip and real estate softens. Oh, and did your boss mention—no raises this year? Again.

The mathematics of this tough economy is simple: There’s more going out than there is coming in.

How to navigate the rocky financial terrain that we’re presented, however, is not always quite as black and white. According to the 2011 American Payroll Association (APA) national online survey entitled “Getting Paid in America,” 70 percent of America’s workers would experience financial difficulties if their paychecks were delayed for just one week, indicating that many workers are living paycheck to paycheck ( By making a few adjustments, employees can maximize income through strategic management of their paychecks and other tricks of the savings trade.

To Withhold or Not To Withhold?

Rhett Sinclair, certified financial planner with Creative Financial Strategies in Aiken, emphasizes that it’s important to first and foremost be aware of how you are filing your annual income tax return, even if you have worked in the same job for a while. “Adjust your withholdings. Ask yourself, ‘Have I historically gotten a refund or do I have to pay taxes?’ Ideally, you want to not owe anything and not get a refund. It’s a play between your withholdings and tax liability,” he says.

Unfortunately, he adds, a lot of people actually budget for that refund in April or are excited when they receive a cash surprise—phew! Just in time for spring break.

Don’t be so swayed by this “gift” from the government, though. When you owe money, it’s like letting the IRS hold your money for a year on an interest-free loan. And, if you get money back, you’ve withheld too much and therefore lost the interest that you could’ve made on additional take-home pay.

So, owe nothing and receive nothing by adding or removing exemptions from your W-4. (Remember that adding exemptions increases take-home pay and subtracting exemptions increases withholdings and decreases take-home pay. Neither is “right” or “wrong;” rather, the W-4 must be completed accurately depending on your tax situation).  

 Remember Retirement

Check with your company to see if you are allowed to make pre-tax contributions through salary deferral into your 401k. Since these contributions are executed on a pre-tax basis, you will not pay any current income tax on the money that is deferred into the plan. Furthermore, the money that is saved can earn interest and continue to grow tax-free. You will only be taxed on the money when it is withdrawn from the plan as ordinary income. “We generally do not save enough for retirement. With larger companies doing away with pensions, there is more and more responsibility on the employee to save,” says Sinclair.

Don’t Flex Your Spending Muscle…Do Set Up a Flex Spending Account

Many employers offer a flexible spending account (sometimes referred to as cafeteria plans) into which employees can make pre-tax contributions toward childcare and out-of-pocket healthcare costs. Often, some of your insurance premium costs can even be pre-tax. Any expense that is considered a deductible medical expense and is not reimbursed through insurance can be reimbursed through the flex spending account ( “What are your co-pays? How frequently do you get sick? Figure your monthly cost and have that taken out of your check pre-tax for your flex spending account,” says Sinclair.      

Be Direct

According to, “direct deposit is an easier way to manage your paycheck deductions and to continue saving for a rainy day.” Direct deposit ensures that a portion of your paycheck is automatically added to savings. With many Americans saving less than five percent of their annual income, direct deposit can be an easy and powerful financial strategy. Research shows that those who allot money for both their checking and savings accounts are more likely to live within their budget.

Keep An Eye on Your Grocery Cart

It seems every financial plan out there includes a ban on restaurants. But eating in can pose challenges too, especially when the cost of living seems to only know how to go in one direction—up. suggests exposing and reigning in your supermarket splurges by using a free online budgeting site, such as or While foregoing specialty and gourmet markets, compare prices among chain or warehouse-type grocers and bring your  coupons, which you can find online (at, and You can also tally up your savings at, which states that if you spend more than $90 a week at the grocery store, you’ll save $40 a month or your next month’s membership of $5.95 is free.

Dust Off the Rabbit Ears

In these tight times, “free” is a golden word. You may have seen the commercials reminding viewers that local channels tuned in from the airwaves are always free. If you really don’t watch many of the cable channels you are currently paying for, consider a vintage look for your HD flat screen and pull out the rabbit ears. You’ll also be surprised to find out just how much of your favorite programming and movies are available on the Internet, through low-cost sites like Netflix and Hulu. If, however, you’re not ready to part with cable or satellite, switch your TV package—now is a good time, since competition among providers is fierce. recommends the TV tool at, where you enter information such as your address, your must-have shows and channels and the TV equipment you own.

Five Other Tips To Jump Start Your Savings

1. Clean your car’s air filter. A clean air filter can improve your gas mileage by up to seven percent.
2. Pump up your tires. For every two psi that all of your tires are below the recommended level, you lose one percent on your gas mileage. Most car tires are five to 10 psi below the normal level. Inflate your tires to improve gas mileage by up to five percent.
3. Peruse your community calendar. You don’t have to spend money to have fun. There are tons of free events, many listed right here in Augusta Family Magazine, going on in the CSRA.
4. Remove credit card numbers from your online accounts. It’s easy to spend online when your card information is stored in an account. If you delete your card from the account, you’ll be forced to spend the time to get your card and think about why you’re spending this money.
5. Cancel unused club memberships. Are you paying dues for a gym or country club membership that you never use? Providing there are no astronomical cancellation fees, bow out of membership status.

Monica Dutcher is an Aiken freelance writer and editor who love to read.

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