Tax time is a great time to access your financial picture. April is when we send in our taxes and pay the last of the previous year’s tax. I usually take the opportunity to look at where I am with my finances and determine if I like what I see or if I want to improve. It also happens to be an extensive part of marriage counseling for many of my clients. Being in healthy financial shape relieves stress and sets the stage for happiness.
This year my April assessment is no different. I like what I see but I want to see better results. That means I will adjust my budget, cut back where I am willing, and continue to put the emphasis on saving and investing.
Looking at Failures and Success
It would be easy to beat myself up for the waste I have done – all the new cars, not hanging on to my investments, not diversifying, spending without a budget limiting it, and so on… Instead I look for the lessons in the mistakes and try not to repeat. I also find it important to look at my successes – real estate investments which did well, living within my means, living a good life, having no debt, having a retirement plan. This encourages me to make good decisions. You might want to assess your own financial picture right now.
Asking Some Important Questions
How are you doing with having six months cash in the bank to handle life’s payments if something goes off-plan? Do you take the time to establish a budget plan and cut back on waste? Follow the plan you have set up? Save about 20%? Pay yourself first? Pay your retirement monthly? Are you out of debt? When will you have your house paid off? Do you have a great interest rate? How is your credit score?
This is a great time to set up financial house cleaning. I do my Profit and Loss statement each month, which really helps me see how I did. It makes me happy to see how much I saved and how much better it is compared to last year. I used to only pay attention in April when I did my taxes – and that was too late. Monthly reviews work. Right now I am on a “No more shoes” routine.
Looking Forward to Something Wonderful
Having things to look forward to also helps me stay the course. Saving for a boat – did that last year. Saving for a landscaping garden/patio overhaul – did that the year before. Saving for a great vacation – did that this year.
It is helpful to consider what you do that sabotages your financial success. Do you resist self-control? Do you avoid discussions with your spouse? Do you not know about your finances? Do you have beliefs that prevent you from having a successful money plan? Journaling, talking about it, going to counseling and developing a plan are all methods that can help you overcome these issues.
Planning for Retirement
Planning for retirement is a biggie. I hope you are doing it every paycheck. If you aren’t, think about living on 1/3 of what you make now. Sound impossible? Better set aside money for retirement every month no matter how tight it makes you live now. I have a client who has her kids set aside 1/3 for savings, 1/3 for expenses, 1/3 for retirement. I have another couple in coaching who help their children make investments with 1/3 of their “earnings.” (They don’t get allowances because they are expected to work and earn.)
1. Six months of expenses saved
2. No debt except mortgage
3. Follow a budget
4. Savings for education, vacations, new home, etc.
5. Save 20% or more monthly/annually for retirement
6. Have retirement savings invested and growing
7. Know how much in every account and wallet
If you got all 7 – you are the best!
If 5-6 you are in good shape and keep working.
Less than 5 you are failing and need a workable plan.
If you need help with this key to happiness see a financial planner or hire a coach. Call me 702-242-4222 or email if you want some guidance.