Managing Cash Flow in April
May you have survived tax week without any major disasters or anxiety attacks. April is just a killer on the checkbook with last year’s income tax payment due, this year’s first quarter income tax payments due, property taxes are delinquent on April 10th, if you have kids you’re paying for summer camp tuition, and then you’re also probably funding Health Savings Accounts and/or retirement accounts. It’s a lot of big checks. December is no easier: year-end tax planning, property taxes delinquent on December 10th, and then the holidays on top of it. It’s a lot of big checks.
Suggestions for managing bills and cash-flow
I’m a big believer in keeping as much cash at your disposal as possible and paying government entities on-time, but not early. No sense in giving someone free use of my money, especially if I might not owe as much as I’m predicting. How to do this is always the challenge.
First of all, there’s nothing worse than surprises, so eliminate them. Be in conversation with your accountant at least three times a year (March, June, and December, if not also September) and talk about your income, how much you’re paying in taxes (whether that’s per paycheck or quarterly payments), what your projections are for the year, and what big expenses you may have this year. That way, if you can adjust your quarterly payments so that they’re more in line with where you will end up at year’s end, the last check is smaller to write.
Second of all, create an account that is devoted to saving up for those “big checks” that happen annually or semi-annually or actually fund them. Set aside money for property taxes, go ahead and fund your Health Savings Accounts, and your retirement accounts. Get that money working for you.
Finally, if you’re behind on payments, create a debt repayment schedule and stick to it. Throw as much money at those debts as you can so you can get in “real time” on your payments. Sometimes just having a plan will make you feel more in control and capable.