Written by: Steve Repak, CFP®
Have you ever been all alone and all of the sudden things just don’t feel right, like maybe the hair starts standing up on the back of your neck? Do you have that same feeling about your finances? If your finances are more frightening than walking through a cemetery alone at midnight on Halloween, there are five “Tricks and Treats” so your financial future doesn’t end up a horror story.
Start Giving Some Money Away
It might sound like a trick but believe me when I tell you, it is truly a treat. See, it doesn’t make sense that if you are giving money away, that you can end up having more. I do not have an agenda here so I am not telling you who to give your money to. If you are tithing, I think that is great, but if you want to give your money to a soup kitchen, the wounded warriors project, or the foundation for homeless ferret’s, it is not as important as to who you are giving some money to, but that you are doing it! First, I believe if you give, you will receive. When you start giving you have no choice but to learn how to live on less. The Treat is that it feels good to give, so when you give, you will fill that void that spending can never fill and depending on your situation you might even get a deduction on your taxes from your charitable giving.
Save Receipts and Write Down Every Time You Spend Money
Have you ever gone out to eat and there was a person who sat across from you who had food stuck in their teeth? They have no idea it is there until someone points it out. That same analogy works when it comes to money. People have no idea just how much money they are wasting until it gets pointed out. For the next 30 days, ask for receipts whenever you spend your money and when you get home at night write down where, when and how much you spent for the day. The Treat is that at the end of the month you should have an extra $100-$250 in your account that you didn’t have the prior month.
Reduce the Number of Personal Exemptions You Are Claiming On Your W-4
If you are married with 2 Children and are claiming 4 people, consider reducing the number of personal exemptions on your W-4. I know I will have some people that will say I’m wrong because you are essentially allowing the government the use of your money and are not earning any interest. The fact is that some people just can’t save and put money away. By claiming fewer exemptions that you are allowed on your W-4 will in effect have more money withheld in taxes. The Treat is that you could have a bigger tax refund which is a nice unexpected windfall the following year that you can used as the foundation for your savings.
Start Putting Money Into the Company Retirement Plan
If the company you work for offers you the opportunity to contribute to their retirement plan and they are giving you free money in addition, this is a NO BRAINER. As the economy has gotten a little better some companies are starting to match again. Depending on the plan some companies even match dollar for dollar up to 5% of your salary. That means if you put in money, they will put in money. The Treat is FREE Money!!!
Open a ME account
Spend, spend, spend will lead to the poor house, while save, save, save gets old after a while. I relate it to people who want to lose weight and think they will never eat dessert again. Extremes seldom work and I have found that people who can find balance are generally happier. Open up a “Me” account and allot 5 percent of what you make to put in the account. Set it up as a draft or bill pay, just like you do with any of your other expenses. The Treat is that you won’t bust your budget and you can spend your hard earned cash any way you want to.
Doing things different can be scary sometimes. But if you don’t want your financial house to turn into a haunted house it is imperative that you start doing something different with your money. If you want to have more, learn to give. Cut out wasteful spending by first finding out just what you are spending your money on. If you find it hard to save, try to be a little creative so you can have some money stashed away in case of an emergency. If someone offers you free money, TAKE IT. Finally incorporate some balance in your life and before you know it, you can shut of your porch lights because all of the trick and treaters have gone home for the night.
Steve Repak, CFP® is the author of Dollars & Uncommon Sense: Basic Training For Your Money. For more information, please visit www.DollarsAndUncommonSense.com.