Between housing, student loan payments, groceries and other expenses, you may sometimes wonder where all your money is going.
Household debt can also be a drag on your income. With an average of $6,662 in credit card debt per U.S. household, you could be paying hundreds per month in debt payments. At the end of the month, it may feel like you didn’t earn anything at all.
But a tool from the Social Security Administration (SSA) shows you how much money you’ve really made over your lifetime. You may be shocked by how much income you’ve earned, especially if you don’t know where it all went.
How to Check Your Earnings Record
The SSA keeps track of your income and taxes paid for Social Social Security and Medicare using your tax returns. It uses this information to calculate your Social Security and Medicare benefits.
You can view your estimated benefits, along with your earnings record, through your designated my Social Security account. If you don’t already have an account, you can create one through the SSA website.
As you walk through the steps to create an account, you’ll need to provide the following:
● Full name, as shown on your Social Security card
● Social Security number
● Date of birth
● Home address
● Primary phone number
The SSA will then ask some multiple-choice questions to verify your identity. For example, you may be asked where you have lived in the past and to share information about your financial accounts.
Once you pass the verification test, you’ll create a username and password. The SSA will then ask for your email address to send you various communications about your account.
After you’ve created your online account, you can log into the site and see your estimated benefits at full retirement age (if you qualify), as well as your last reported earnings. There’s also a link to view your earnings record. Your earnings record includes a comprehensive list of your taxed Social Security and Medicare earnings for every year that you’ve worked.
You can then add up your yearly earnings to see how much you’ve earned since you joined the workforce. The tool is also helpful for seeing how your income has increased over time.
How to Keep More of Your Income
Now that you know how much you’ve made over the years, you may be wondering what happened to it all. Here are a few tips on how to keep better track of your money and hold onto more of it in the process.
1. Create a Budget
If you don’t already have one, then creating a budget is the first step to increasing your net cash flow, or the difference between your income and expenses. Keeping track of your transactions gives you a good idea of where you can cut back.
To set up your budget, start with your take-home pay (not gross income from your SSA earnings record). Then take a look at your expenses for the last month and categorize them. For example, you can create categories such as rent or mortgage payment, groceries, household items, entertainment, etc.
Next, determine areas where you can cut back and set a budget for each category for the following month. During that time, keep track of each transaction to make sure you stay within your spending limit for each category.
This process may be hard in the beginning, but it will get easier over time as you get used to your new habit. You can also compare and use budgeting apps to help make the process easier.
2. Tackle Your Debt
For some people, monthly debt payments make up a large portion of their expenses. Between credit cards, an auto loan and a mortgage, you may be paying hundreds or even thousands of dollars a month toward your household debt.
If you have student debt, for example, consider refinancing your student loans to lower your payment, interest rate or both. Also consider other strategies to pay off debt, such as the debt-snowball or avalanche methods. These approaches help you target one debt at a time, rolling your payments into other debts as you pay each one off. (You can keep tabs on how your debt is affecting your credit by viewing two of your credit scores for free on Credit.com.)
3. Use Bonuses & Tax Refunds Wisely
Once you get into the swing of budgeting, it can be easy to manage your monthly paychecks.
But getting a small windfall in the form of a bonus or tax refund can make it easy to rationalize spending money on things you don’t need. Instead of wasting that money, use it to pay off debt. You can also save it for a rainy day or a future goal.
4. Consider Moving
If you live in a state with income tax, you may be missing out on extra cash every year. There are nine states with no income tax on wages and earnings you could consider moving to — if that’s a feasible strategy for you:
● New Hampshire
● South Dakota
Of course, where you live isn’t just a matter of how much you pay in taxes, as your family, friends and job won’t likely come with you. What’s more, some states may make up for having no individual income tax by taxing more heavily in other areas. Make sure you do your research before considering a big move.
Treat Your Money Like You’ve Earned It
You work hard for your money, and it can be devastating to look back at how much you’ve earned over the years and wonder what happened to it all. The better you manage your money, the more of it you’ll keep.
As you budget, pay down debt and learn other money-management techniques, you’ll be able to look back again a few years from now with confidence that you’re on the track toward financial independence.