Tax season is always an interesting time in people’s financial lives. There’s nothing like reviewing how much you spent, how much you earned and how much you did or didn’t save to stir things up in your relationship with money. Read on to learn about the nine reasons to file your taxes today and to hear the gory details of my tax prep experience this year.
9 Reasons to File Your Taxes Today
1) practice boundaries
2) enjoy self-care
3) identify and stop leaks
4) unclutter your space
5) expand your peace of mind
6) look at the big picture
7) plan ahead
8) increase income
9) satisfy needs and wants
Practice Boundaries: It takes something to make the time to work on your taxes. This year, I had to block out an entire weekday – no clients, no husband, no phone calls and no to-do list. Just me and my laptop, files, bank statements, notebook, and the Money Minder – my primary money management tool.
Enjoy Self-Care: I dressed in comfortable clothes, ate breakfast, put some of my favorite music on and poured myself a pot of tea – a ritual. I looked forward to my acupuncture appointment and dinner with a girlfriend the next day – a reward. If examining your money makes you feel anxious, then be sure to reengage the basics self-care – 8 hours of sleep every night, eating well, drinking plenty of water and getting regular fresh air and exercise. If a consistent routine of self-care does not counter balance your financial irritability, consider inviting in a financial confidant or accountability partner. You don’t have to do this alone!
Identify and Stop Leaks: In the process of preparing my finances for my CPA, I discovered and stopped three expensive leaks. I was looking for something else in online bill pay and saw that we had two monthly payments set up for Time Warner. I logged in to our account and saw we had a balance of -$868, we had been overpaying by double for the last six months. Next, in sorting some paperwork, I saw a notice about my jetpack, a hot-spot wireless service. It occurred to me that I had used this service a sum total of zero times since I got it nine months ago. I called Verizon and canceled it. Yes, the phone call took 15 minutes and yes, there was a $155 early termination fee, but for me, the fee outweighed the emotional burden of paying for something I was not using. The final leak was in credit card processing fees. Focusing on my taxes and annual totals forced me to see the thousands of dollars I’m spending per year on fees for my business and I have since applied to a service that is half the cost.
Unclutter Your Space – Tax time allows you to get organized. If you haven’t already, now is the perfect opportunity to move all of your 2013 paperwork from your current files and shelf space into a 2013 binder, box or envelope. If you have been procrastinating on selling unwanted items of value or filing for medical reimbursements, now is the time to do it. Move that never worn collection of designer heels to where it should be, in the hands of high-paying customers on eBay. Having more space is just one of the benefits of being financially savvy!
Expand Your Peace of Mind – By engaging the numbers, I took a close look at my action plan – my list of financial housekeeping tasks. I finally got closure on three outstanding items that were weighing me down. For the bulk of last year, I had righteously insisted that Audi owed us $363 for expenses incurred due to our registration never arriving in the mail. Guess what I found while doing my taxes? The original registration that, in fact, had arrived on time – it was in a sealed envelope that I had never opened. I also finally got clarity on whether or not I had credit at a dance studio in Midtown – I had been putting undue pressure on myself to return, but could not seem to make it happen. I finally responded to a luggage repair inquiry from August of last year resulting in a $70 credit. Following up and resolving these quandaries relieved stress and made me feel empowered to let go and move on.
Look at the Big Picture – My husband and I track our money fog a.k.a. unknown expenses. Through the process of working on my taxes, I saw that we had $1,112 of money fog in the second half of 2013. That averaged $185/month – it adds up! We were both able to share about our tolerance for the unknown and ways to prevent losing this much money in the future. We asked ourselves, what’s working, what’s not working and what changes do we need to make? By the way, I recommend completing your 2014 annual plan and net worth assessment by April 15th at the latest.
Plan Ahead – Years ago when I was newly self-employed, I actually mailed tax payments to the IRS and State every month – that’s what worked best for me at the time. Now, I have a tax savings account set up with monthly automatic savings. My income increased last summer and my Q3 estimated tax payment was more than double the previous one. For me, I strongly prefer paying taxes throughout the year to owing a lump sum every April. Remember you have choices – one of the greatest luxuries in life!
Increase Income – Good news. We’re getting a refund, something I call sudden money. Sudden money includes tax refunds, bonuses, reimbursements (small or significant), other refunds, inheritances, and periodic income such as book royalties, sold personal goods, etc. And no, payday is not a form of sudden money. We literally found money and increased our inflow by identifying and stopping leaks, inquiring about credits, and filing for reimbursements.
Satisfy Needs and Wants – As with any form of sudden money, I suggest considering the Rule of Thirds. Pause and think about the possibility of putting 1/3 of your tax refund towards the past, 1/3 towards your present needs and wants and 1/3 towards your future. Absolutely treat yourself and be mindful. A core value of financial well-being is responsibility. It’s essential to stay connected to your whole financial picture. The past can include student loans, mortgages, car payments, personal loans and credit card debt. Remember, needs sustain you and wants entertain you – keep an ongoing list throughout the year on your smartphone, Pinterest or a collage board. Your future can include a travel savings account, periodic expenses savings account, safety net, retirement account and other investments. When sudden money comes in, use the Rule of Thirds to take a step back and make a sound decision.
Set yourself up for success today and remember early is good – as soon as you file your taxes, you will have clarity, a refreshed action plan, more counter space and very well more money!