Spring Clean Your Budget
Perhaps we have more time for spring cleaning this year than usual. Let’s include tending our garden as well, our financial garden.
We don’t always spend the time we should to consider our spending. This is particularly true if you have plenty of financial resources and don’t have to think about everything you buy. I find these folks are less inclined toward having a spending plan, but I think it is wise for them as well as those who are needing to watch their spending for the sake of not running out.
When you look at your spending, it can be like looking at yourself in a mirror. Do you like what you see? If not, make the changes necessary so you will next time. If you do, Bravo!
I am encouraging you over the next week to look at your spending over the past year and create a plan for the coming year so that you are more purposeful in where you send your money off to buy things, services and experiences. While we focus primarily on investment dollars, let’s not be complacent about the funds that are funding necessities, lifestyle and giving.
It is particularly on my mind to spend more with local businesses, the folks who are providing jobs in my community. This isn’t just a tough time for us, it’s life or death for many businesses out there right now. So, as you look at your budget, think about who you’re supporting in the process. Think about people who serve you that probably deserve a raise, think about how you can cut back on things that are meaningless to you or even wasteful, like the things you signed up for that 30-day free trial, but you gave them a credit card in the process. You never used it or used it once and now you find they’ve been charging you for six months.
It’s also a good time to switch the personal credit card on file billing you automatically for a business expense that you are forgetting to deduct on your taxes each year. Or if you don’t have everything set up on bill pay automatically, you can consider setting it up now. This is a great time saver. If you add the step of just looking over the spending report monthly, you can catch anything that looks off and still be way ahead time wise.
Consider negotiating fees. One such example is Sirius XM Radio. They always seem to have a dramatic increase in the rate if I just let them renew automatically, but if I call, I get the special pricing again. I’ll add that I’m not a fan of their economic model, but I do like having the service.
Here are a few more thoughts as you go through spring cleaning:
Be thoughtful of the other people involved when making cuts.
Do not under or over-react to the current situation. Don’t waste money, but don’t assume things will stay at this level forever.
Use a system. It can be Excel, Quicken or if it’s a business budget, QuickBooks. Or any of a myriad of systems out there. I am an agnostic when it comes to what tool to use for this, just use whatever is easiest for you. An important factor in any of these systems is the Chart of Accounts or Categories. This should be grouped in a manner that means something to you. It can be Kids Soccer or Date Night or Vacation Travel.
Do some research on any expenses you don’t recognize.
If you haven’t completed your 2019 income taxes (and the deadline isn’t until July 15th this year) consider watching for deductible expenses as you go through. Or if you have and it’s significant, consider amending the return.
Think of ways to stretch the budget. So, you don’t need to use coupons or buy things on sale, maybe if you decided you would start to do so and give the difference to a favorite charity it would be more reflective of your values.
Consider cutting back in areas you just think you are spending more than you should. If you’re horrified to find that you spend $600 a month eating out, this is a great time to plan to eat in more and kick your cooking skills up a notch.
Be sure to add things that are goals to the budget, particularly big-ticket items, like that new car. Setting aside a little each month so you have the cash purposefully in place for the purchase. It is common to transfer some funds each month to a separate account, like a money market fund for those items and the bigger periodic expenses, like vacation.
Include a giving plan with your spending. Being intentional about our charitable dollars can allow us to leverage them with planned giving techniques that can result in more tax savings or can be focused on a particular goal.
This is a fun exercise for some and a miserable one for others. I am hoping you will have some fun with it. Approach it as an opportunity to FIND money, to PLAN for future fun and goals and to feel like you have a handle on your spending. Your garden grows much better when you tend to it.
Pull out the WEEDS of WASTED money.
Plant the SEED DOLLARS to fund goals.
Water with the SPRINKLER system of looking after your financial garden periodically to compare planned to actual expenses.
We are wishing you all a happy spring and an enjoyable weekend at home!
If you want more tips and tricks on budgeting for the practice, for clients, or for yourself, contact Kris Hartland, CFP™, CFS, CEBS, EA.
About the Author
Bernie DeLaRosa, CFP®, ChFC®, CRPC®, CLU®, APMA®, CASL®, BFA™
Managing Business Consultant
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