Daylight Savings Time is upon us and I am not a fan. The pessimist in me thinks, “What’s one more hour of lost sleep after all the hours I’ve lost thanks to COVID-19?” The optimist in me thinks, “Yay! Spring!” Since we can’t control time, let’s concentrate on saving something we can control: money. Our financial goals fluctuate with the seasons of our lives, but we sleep better if saving is always one of them. Here are three rules of thumb that give me financial peace of mind: live within your means, fund your future, and be generous.
Live Within Your Means
I’ll state the obvious. Make more money than you spend. Having said that, there are some maybe not-so-obvious ways to save more of your means. Do you use a cell phone? Internet? Cable TV? Satellite TV? Can you live without one of these? If not, are you getting the best plan for your budget? You can check and adjust accordingly. Finding a cheaper plan doesn’t necessarily mean you have to switch providers. You can contact your current one and ask them to match their competitor’s rates. Do you use a travel rewards credit card? If earning points for travel no longer fits your lifestyle, switch to a card that does. For example, while you may not be traveling as much right now, you’re still buying gas and groceries. Switch to a credit card with cash back rewards for those purchases.
Fund Your Future
If you’re getting a tax refund of more than $2000 (the average refund for 2019 was $2535), consider filling out a new W-4 with your employer to have less tax deducted. Some tax payers I know purposely overpay income tax so they’ll receive large refunds. They use the money to pay for big ticket items, and that is a choice. Another choice is a short-term savings strategy for big ticket items. For example, direct depositing that extra amount into a high-yield savings account instead of overpaying income taxes. A tax refund check seems like free money. It’s actually money you give the government every month, it uses for a year (interest free, btw), then finally allows you to have what’s left. If that money stays in your paycheck, you have the option to invest it in your employer’s 401(k) plan, or your personal IRA, or another long-term savings option. This both removes the temptation to spend the money, and invests it for your future.
Be Generous
You feel good when you help others. Think about how good Ebeneezer Scrooge felt when he was generous with his money. But you don’t have to give money to be generous. For example, when your grocery has non-perishable items on sale and you have coupons, buy the limit, keep a couple for yourself and donate the rest to a local food pantry. Do you have clothes you haven’t worn for two years? (Not wearing them in 2020 doesn’t count.) Bag them up and donate them to your local thrift store. When you don’t have a lot of money, you still have something to give; even if it’s just giving a smile to a stranger; with our eyes, because, you know, mask. Our abundance isn’t always measured in money.
What do you do to maintain financial peace of mind? Please share in the comments.