Income tax time. This is that time of the year in which either you are desperately worried that you and your family will be out on the street when the IRS realizes you don't really have 10 dependents living in your household or you feel like just you won the lottery because you have a "bonus" check coming your way from the money you lent Uncle Sam over the past 12 months. If you are "lucky" enough to be in the latter category, make sure that you take time to assess your financial situation to make sure you don't wake up two months from now and wonder, "What happened to all my tax refund money?" It happens to people every year, as they see the latest pair of Air Jordans (I can't believe anyone other than rappers and basketball players would spend $160 for a pair of sneakers) or that new Michael Kors bag (put MK on anything and people (when I say 'people,' I mostly mean women) will pay almost whatever price you ask) and just have to have it. You can be smarter than those individuals this year, however, by following a few simple rules that will make sure you don't be one of the many people who eventually end up giving this money right back to Uncle Sam in some form or another.
WAIT 30 DAYS BEFORE DOING ANYTHING WITH IT
Immediately, individuals get excited about all the things they may have been waiting on for the entire year. They are so focused on the things they may be able to buy that they actually, in a sense, "spend" the money before they get it. Relax. Don't get so attached to an idea of purchasing something new that it becomes too hard to let that opportunity go if you decide it's not the best thing for you. Often, our emotions get so caught up in being the first person with that new bag or that new outfit, that we become attached to the idea and find it very hard to let it go. Our minds begin to see this as being a reality and as soon as we get the money to make it so, we rush off to whatever store to spend anything to make our dream come true. Don't do this. Take some time to truly assess your priorities and allow the money to sit in the bank for at least 30 days before making a decision. This will give you more time to get comfortable with the concept of not buying something. Over time, you may begin to realize how you actually didn't need the product at all and how your life will be just fine without it. This 30 day waiting period will greatly increase the chances the money will still be there 60, 90, or even 365 days from now.
DON'T LEND IT OUT
One of the first things that people feel they have the ability to do is help others with their money. While this is not often a bad thing, there are some people who are unselfish to a fault. By always lending people money when you have extra, you can put yourself in a precarious situation if you are put in a bind. You never know what the future may hold, so by focusing on "stacking as much paper" as you can, you decrease the chances that some catastrophe will happen in which you are not able to withstand. Just like you shouldn't spend the money before 30 days or up, you shouldn't lend it out to anyone during this time either. When people ask, just let them know that the money is spoken for and you cannot afford to do so. They don't have to know by "spoken for" you mean "not meant for them," so there should be no issues there. Keeping the money in your possession is key because mentally you want to get comfortable knowing that you have the money and are making the conscious effort to NOT spend it. Seeing it in your bank account and knowing it's there helps your mental fortitude in relation to the discipline needed to be thrifty and not spend money just because you have it. By doing this, as you continue to add to your savings through other investments or the natural course of payments from your employer, you will continue to not spend that money as well.
STOP THINKING ABOUT IT
Money is funny. The more we think about it, often the less we have. When it comes to money, just know that it's in the bank and gaining interest (as minuscule as it may be), but don't be one of those people who checks their balance every 20 minutes to make sure nothing has changed. In the famous words of...well...me, "Chillax." Know that the money is there and isn't going anywhere, but don't consistently think about it or wonder what you could do with it. The more you think about the different things you could potentially buy with it, the more likely you are to convince yourself that you've "earned" that new pair of earrings or that trip to Jamaica. By allowing yourself to not focus on it and go on with your life, you don't give your brain a chance to manipulate your thinking to allow you to convince yourself that saving the money is "silly" and that you need to "treat yourself" a little. Out of site, out of mind, generally leads to a pretty healthy savings account balance.
Income tax time is generally a good time in people's lives. A little extra money typically is a good thing. It allows us to buy and experience some things we may desire at that time. What you want to make sure of, however, is that you always make wise decisions when you may get larger amounts at one time, as you can easily waste it if you are not careful. By applying some of these simple rules I've shared today, hopefully you will have ability to hold on to your income check this year a little longer than last year...if it's not too late already.
Ken Middleton is an Account Manager at TEKsystems that specializes in IT staffing and services. He is a graduate of UNC-Pembroke and current MBA student at Scheller College of Business at Georgia Tech.
