Five Ways To Quickly Fund A Roth IRA
When you struggle each month to balance your budget, it is often hard to figure out where your Roth IRA contribution is coming from. To many people, finding the $5,500 maximum Roth IRA contribution each year is a little daunting. It can be a lot of money for some families if it is not budgeted. But, it does not have to be that way. There are several ways that you can quickly fund a Roth IRA for the year.
1. Sell Some Stuff
Selling items that you have lying around the house can be a way to quickly fund a Roth IRA. Many of us have items that we no longer use that can be sold either at a yard sale or online to help bring in money for your Roth IRA contributions. I used to have a large DVD movie collection until my wife one day asked me how many times I would watch these movies. She had a great point. I had thousands of dollars tied up on movies that I would only watch once or twice. This is just one example of items that many of us have around our homes that we could sell to raise money quickly to fund a Roth IRA.
2. Cut Your Budget
This idea is hardly ever popular, but one of the fastest ways to find extra money for investing is to cut unnecessary expenses out of your monthly budget. Most families have areas of their budget where they could trim the fat from. Do you have 100 cable channels but only watch 20? Do you eat you at restaurants every weekend? For most people, there are simple changes that we can all make in order to keep money in our pockets at the end of each month. These savings can really add up and can be used to help quickly fund a Roth IRA.
3. Boost Your Income
There are two sides to the classic accounting equation: income and expenses. Many people tend to focus their energy in cutting expenses in order to raise their disposable income level because it is often the easiest for them to accomplish. But, you should not count out increasing your income as a way to boost disposable income. By increasing your income, you can have more cash available to quickly fund you Roth IRA. You may want to consider getting a small part-time job or picking up a little freelance work in order to raise your income. You could quickly find yourself earning the $5,500 you need in a short amount of time by adding a little bit of side income to your take home pay.
4. Use Your Tax Refund
You can fund a Roth IRA for the previous year up until the April 15th tax deadline. So, for example, if you received a large tax refund in February 2014, you can use that money to fully fund a 2013 Roth IRA. This can be a very quick way to finish your Roth IRA funding with money that does not have to come out of your family’s monthly budget. Relying on your tax refund to fund your Roth is usually a good way to get started, but is not a long term solution because you never know what your refund is going to be.
5. Consider Breaking It Down
While you may want to rapidly fund your Roth IRA in one quick swoop, you may find it a little easier task to tackle if you break it down into smaller chunks. The $5,500 yearly contribution limit for a Roth IRA for someone age 50 and under is $458 per month or a little over $100 per week. It can seem a little more manageable if you are struggling to make ends meet by separating it out like that.
Photo by dricker94 via Flickr
Important Roth Information
Each year, the IRS updates the rules for IRAs. Here are all the details for 2016: