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KeyBank's financial wellness prescription: Making the most of tax reform impact on take home pay

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Thu, Feb 8th 2018 07:00 am
Editorial by KeyCorp
Starting this month, approximately 90 percent of U.S. workers will see a slight increase in their take-home pay, courtesy tax reform that reduces personal tax rates as much as 3 percent.
Granted, those new tax rates won't result in significantly larger paychecks. But at KeyBank, we believe small steps can pave the way to turning big dreams into reality.
Patrick Smith, who leads KeyBank's financial wellness program, recommends the following steps that can help you make the most of extra income coming your way due to tax reform:
Emergency savings falling short? You're not alone. According to Bankrate.com's most recent financial security index survey, only 39 percent of Americans would have enough emergency savings to cover an unexpected $1,000 expense. We recommend emergency savings of at least three months take home pay.
Use direct deposit to automatically allocate your increased income to build emergency savings. And talk to your banker about savings account options to be sure you are making the most of your savings opportunities.
Keep on spending less than you earn. In other words, don't use that extra income as a reason to spend more.
On target to max out your 401K? Great news! Talk to your banker about establishing an IRA or other additional retirement account. Again, your increased income might not mean thousands more dollars, but small, regular contributions will add up
Roll that extra income into your regular payment on high-interest credit cards. In addition to paying down a balance and saving on current interest, you can head off the impact of interest rate increases that might happen later this year.
"At KeyBank, we believe there is always a way to help our clients achieve their personal financial goals, one small step at a time," Smith said.
This material is presented for informational purposes only and should not be construed as individual tax or financial advice. Please consult with legal, tax and/or financial advisers. KeyBank does not provide legal advice.

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