The tax season is upon us. For many, the season comes with anticipation of a grand payday, the biggest “extra money” payday of the year. For these earners, it should be a clear indication of financial mismanagement throughout the year. Large tax refunds mean that you had less money available on each pay check. Some are okay with that because they know that they would not have saved or invested that extra money. Now that you have that money, I want to offer some tips to ensure that it makes your year easier financially.
I begin with three of the most fundamental behaviors of the financially literate. First, budget fun and leisure. Second, only pay your bills twice per month. Third, limit your shopping, eating out (even for lunch), and other payments to twice per month.
It was only about 3 months into our marriage, and my wife said to me, “I feel like I am only working and paying bills.” What she was getting was important–not the least of which was because a husband should always seek to listen to what his wife is saying AND not saying. My new wife wanted to have some enjoyment from the meager amounts we were earning. If we did not enjoy the money, the point of work was lost.
In addition to paying bills, I began to budget recreation and leisure activity. It doesn’t have to be expensive, but you must invest in your health and well-being. I invested in in-line skates, and my wife and I began going the park a few times a week to skate. Skates were an item that we could not afford. But, they were an investment that yielded some great memories and a sense of balance. Since then, I have made a point to budget for investments in recreation and leisure. The promise of fun can be a sustaining motivator for the discipline it takes to work and create beyond a job.
Often, the problem is that you leave fun off your budget. This leads to binges and getaways that you convince yourself you deserve. These expenditures often put you in a position of financial chaos when you return to your reality. I’m asking you to change your reality. Instead of the dichotomy of “the right and responsible thing” versus “the fun and exciting thing,” order your budget integrating the two. Be responsible in budgeting for fun.
Next: Bill Payment Schedule