Guest Blogger Day: 8 Expenses to Factor into Your Home Budget

Friday is our guest blogger day and we have a great one for you.  Even payroll professionals still need to handles the basics of family budgets.  We hope you find this article from earnin.co useful.  Please let us know in the comments section below.

Your home budget, also known as your household budget, is the money you set aside that will go toward essential living expenses. It’s critical to budget your finances to only spend what you can afford and reach your savings goals.

You can guess what kind of things go into a home budget: rent or mortgage, groceries, savings, debt repayment, utilities, etc. However, people sometimes forget to factor the following expenses into their budgets, which catches them by surprise and forces them to reallocate their spending. Keep these costs in mind when figuring out how to budget your monthly paycheck and savings:

Transportation & Parking

You know you’ll need to pay for your vehicle each month if you own or lease one, but what about gas? Parking? If you don’t own a car, then how much does public transportation cost in your area?

According to Student Loan Hero, the United States’ median household income was $61,937 in 2018. Households that earned this amount spend an average of $763 per month on transportation, including gasoline and car payments. Public transportation is cheaper, but again, it depends on where you live — you still might spend as much as $160 per month if you exclusively use Bay Area Rapid Transit in San Francisco.

Insurance Premiums

Insurance premiums are a significant hit on your wallet, but they’re necessary to have. Health and car insurance go without saying, but you may owe mortgage insurance if you put less than 20% down when purchasing your home. There’s also life insurance, personal insurance, contributions to social security, and more.

It’s difficult to calculate how much the average person in the U.S. spends on insurance because people’s situations vary tremendously. You might be lucky and only spend a few hundred dollars a month if you live in an inexpensive state and only need the basics. If you need more, then you could spend well over a thousand. Other factors affect your insurance premiums, too, such as your age, marital status, job, and education level, so combine all kinds of insurance you need to pay for when calculating your monthly household budget.

Out-of-Pocket Costs and Emergencies

Insurance doesn’t cover everything, though. Medical care is notoriously expensive in the U.S., so you should be prepared to pay out-of-pocket costs that exceed the scope of your health plan.

Disasters strike in other ways, too. Hopefully, it’s small — maybe you spilled coffee on your only nice shirt and need to buy a new one for work — but it might be an outright emergency, such as someone robs you or a natural disaster impacts your home. It’s crucial to have emergency money set aside to cover an irregular or unforeseen circumstance.

Pet Care

You budgeted to feed yourself, but what about your pet? These costs might be low if all you need to buy is food every month and a few toys that last you a year, but vet bills can be expensive if your animal friend has health issues. If you prefer to outsource much of your pet care, you should budget much more to account for sitters, boarding, and walks. Of course, pet care expenses depend on the kind of animal you have, so anticipate how much financial TLC your pet will need.

Subscriptions and Memberships

Subscriptions and membership fees on auto-renewal can sneak up on you. Don’t fall into the trap of thinking you’ve planned your budget for the month perfectly, only to be hit with a $15 Netflix bill you forgot to account for. These costs shouldn’t be out-of-sight, out-of-mind, so keep track of streaming services, subscription boxes, or shopping memberships you pay for.

Fees, Fees, and More Fees

Fees are everywhere. They’re like pests you can’t seem to get rid of, but you forget about them when they’re not in the room. Make a list of all the fees you might need to pay throughout the month, including:

  • Bank account maintenance fees;
  • ATM fees;
  • Overdraft fees;
  • HOA dues;
  • Credit card fees;
  • Late fees;
  • Monthly service fees.

 

And more. There are ways to avoid or reduce many of these, but don’t buy something you don’t need if a fee will hit you later and you’re living paycheck to paycheck.

Home & Vehicle Maintenance

It’s rare for everything to work as it should, especially if you can’t afford high-quality goods that last longer. Expect to pay for vehicle upkeep, appliances that stop functioning, and fixing potential damage. These costs are related to your emergency funds, but paying for regular maintenance will (hopefully) prevent actual emergencies from happening in the first place.

Different Kinds of Savings

Save as much as you can. Don’t forgo leisure entirely — it’s important to your mental health to have fun, and you deserve to — but besides general savings accounts, remember to save to buy a house, pay for college (or someone else’s education), emergencies, retirement, and more. Your monthly contribution to each may vary, but having substantial savings will set you up for major purchases later in life.

Budgeting is an essential skill. You can use a budget finance app if you need assistance, but remember to factor in every possible expense to avoid tight situations.

This article originally appeared on Earnin.

Please note, the material collected in this blog is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or Services.

 

Weekly, Monthly & More: How Your Pay Schedule Affects You…The Basics of Pay Periods

Editor’s Note: Sometimes it is good to review the basics of payroll. Not only to ensure that the payroll department understands them but that your company’s employees can also understand these sometimes difficult tax or wage hour regulations.  Today our guest blogger from earnin.co is covering the basics of pay periods.  A good review for you, your staff or to help your employees understand the concepts as it affects their daily lives.  I hope you find the blog useful and informative:

Let’s say you had a job as a cashier at your local grocery store that paid every two weeks. You quit that position and got a new job in an office, but this one pays once a month instead. What gives?

There are different kinds of pay schedules that determine when and how often you receive your paycheck. Businesses usually set their pay schedules to benefit themselves. Payroll management entails labor and costs, so companies will go for the option that is more convenient and saves them money. Employees (as opposed to freelancers) don’t normally get to decide how often they get paid, so it’s critical to factor your pay cycle into your weekly or monthly budget, especially if you live paycheck to paycheck. Will you have your money when you need it?

Here are four common types of pay schedules:

Kinds of Pay Schedules

Weekly Payroll

Some businesses pay their employees weekly, which means employees receive their income on Fridays. This schedule is more common amongst freelancers, contract workers, and trade industries like construction and manufacturing. These job types commonly have irregular hours, so it makes sense to pay workers according to a shorter time frame. While weekly schedules are a favorite amongst employees because it means you have more regular access to your money. If you drained your bank account on bills last week because it was the end of the month but want a night out with your friends, no worries — you get paid on Friday, so you can afford that night out as long as you save enough for your upcoming expenses. However, most businesses avoid the weekly system. Payroll vendors frequently charge money every time a company (their customer) runs payroll. Doing so weekly takes extra time to process, so companies will opt for more extended periods to reduce costs and add convenience.

Bi-Weekly Payroll

A bi-weekly pay schedule means you receive your paycheck every two weeks. This cycle amounts to 26 or 27 paydays per year. Many businesses prefer bi-weekly timelines because they save money processing payroll and can calculate overtime more easily (each paycheck accounts for approximately 80 work hours). As such, bi-weekly payroll is more common amongst businesses that pay their employees hourly. Bi-weekly schedules are not challenging to manage, but two months out of the year will have three paydays instead of two. Accountants need to factor in these paydays when calculating voluntary employee deductions, like healthcare, which are equal in a semi-monthly pay schedule.

Semi-monthly Payroll

Semi-monthly pay means your employer pays you twice per month. As such, you might receive your income on the first of and in the middle of the month (likely on the 15th), or in the middle and end. A semi-monthly pay schedule entails 24 payments per year, which makes it distinct from bi-weekly. If you earn $45,000 per year on a bi-weekly cycle, your paychecks (not accounting for taxes and deductions) will be around $1730.77 each, whereas your paychecks will equal $1,875 on a semi-monthly schedule. It’s the same amount of money but divided differently. Semi-monthly payroll is common for salaried employees. Calculating deductions is easy for accountants, and you always know which dates you will receive your income.

Monthly Payroll

You guessed it — monthly payroll means your paycheck comes in once a month. This format is ideal for businesses because it makes accounting easy and reduces processing costs, but it’s disadvantageous for employees and contractors because they have less frequent access to their money. If you work a job that pays monthly, you need to be extra careful with budgeting because you’ll only receive your income in lump sums 12 times per year.

Your pay schedule does not affect how much you get paid in a year, assuming you work the same number of hours either way. However, your pay cycle does influence how often you have access to your hard-earned money, and therefore the way you budget. For example, let’s say you paid all your bills last month and now don’t have much left in your savings. Your job pays you bi-weekly, so you’ll have enough money to pay the first round of next month’s expenses, but your next paycheck won’t arrive in time to pay the rest. Now you’re in a tight spot. One option is to make an early paycheck request from your employer. If your employer agrees, they will provide you all or part of your paycheck before they usually would, allowing you to pay your bills, but it lengthens the time between your next paycheck.

Another option is to use financial apps. Your job’s pay cycle is out of your hands, but you can control when you get paid with apps like Earnin. Earnin allows you to take out up to $500 of your earnings per pay period. This way, you won’t have to worry about missing a bill because your employer’s pay schedule isn’t in your favor, and you won’t have to pay mandatory fees for the convenience. Your pay schedule affects your ability to pay expenses and for recreation, so it’s important to know how often you’ll receive your income when applying for a job or managing your finances. Though your pay cycle might not always work in your favor, there are ways you can control having access to your money.

Restrictions and/or third party fees may apply, see Earnin.com/TOS for details

 This article originally appeared on Earnin.

 

IRS Gearing Up to Implement Taxpayer First Act

The Internal Revenue Service today announced several key leadership appointments as work continues implementing major provisions of the Taxpayer First Act. These leadership changes are part of a larger effort underway at the IRS to continue work on the Taxpayer First Act, which includes work to re-imagine the agency’s tax administration and work to improve taxpayer service and enforcement.

These appointments include:

  • Douglas O’Donnell will serve as the new IRS Deputy Commissioner, Services and Enforcement. O’Donnell has been the Commissioner of the Large Business and International Division of the IRS (LB&I) since 2015, where he also served as the U.S. Competent Authority.
  • Among other leadership changes, Sunita Lough will be returning to serve as the IRS Commissioner of the Tax Exempt and Government Entities Division (TEGE). Sunita Lough has served as the IRS Deputy Commissioner, Services and Enforcement, since September 2019. She is returning to her prior position as Commissioner of TEGE, a role she previously held from 2014 to 2019.
  • Nikole Flax will take over as Commissioner of LB&I after serving as Deputy Commissioner of the division since 2017. She has held many key roles at the IRS including IRS Chief of Staff and Assistant Deputy Commissioner for Services and Enforcement, among others.
  • Holly Paz replaces Flax as Deputy Commissioner of LB&I. She is leaving her current role at LB&I as the Director of the Pass-Through Entities Practice Area, which supports all of LB&I with S Corporation and Partnership Specialty teams and the Ogden TEFRA Unit. She has held other key roles at the IRS including serving as the Director of Corporate Issues and Credits in LB&I’s Enterprise Activities Practice Area, among others.
  • Edward Killen has been serving as Acting Commissioner of TE/GE and will return to the role of Deputy Commissioner of TE/GE. Prior to joining TEGE, Killen has held several leadership positions including the IRS Chief Privacy Officer and Senior Advisor to the IRS Deputy Commissioner of Operations Support, among others.

 

IRS Offer Guidance on ERC for 2021

The IRS has released Notice 2021-23 which provides guidance on the employee retention credit provided under Section 2301 of the Coronavirus Aid, Relief, and Economic Security Act, as amended by section 207 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, for qualified wages paid after December 31, 2020, and before July 1, 2021.  Notice 2021-23 amplifies Notice 2021-20 and provides employers with guidance on how to determine their eligibility for and the amount of the employee retention credit they may claim for the first and second calendar quarters of 2021.