Who doesn’t get excited when their tax professional tells them, “You’ll be getting a refund this year!” WOO!!! Smiles emerge across stressed-out faces, you walk a little lighter, walk a little taller, and you start to count down the days to when that lovely chunk of money hits your bank account.
Then the dream starts to kick-in, “What shall I do with that money?!”
What DO you do with that money?
I mean, this is exciting! You’re getting a perk…a little extra money coming in. Dopamine levels rise, which is a welcome change to the endless feelings of stress and anxiety. This is a chance for you to breathe…even for just a little bit.
You should celebrate…go out to eat…plan a weekend getaway…buy that new fridge! You should…[insert whatever you’ve been wanting, but couldn’t have just yet]. Or should you?
When excitement hits, pump the money breaks.
There is nothing wrong with the above feelings or wants, but always take a moment to pause. Dopamine has this sneaky ability to make everything we want urgent and necessary. And when things we want, but couldn’t have before, suddenly become possibly available…we amp up the excitement, grab our wallets, and SWIPE!
Your money’s comfort point is a magnet.
That feeling of being “free” to spend is because we have shot to the surplus side of our money’s comfort point.
Our money’s comfort point is the point where everything to the right of that point is “extra” and everything to the left is “short”. When our finance meter is in the “extra” zone, we feel confident, easy-going, and our happiness levels are in surplus. When our finance meter is in the “short” zone, we feel anxious, nervous, and our happiness levels are in a deficit.
Say we are right on our comfort point, or maybe a little to the left, and we get a refund. BAM! We shoot to the right side and all seems good. We feel free to spend a little because we are in surplus mode and as long as we don’t go beyond our comfort point, we are good to spend a little. But that comfort point is a magnet and soon, if we are not careful, we will spend our way right back to where we were before – teetering on a balance beam, trying to stay afloat.
Then what do we do with extra money?
Seeing that tax refunds are still a few months away, this is the PERFECT time to plan out what you want done with ANY extra money that comes your way.
What I like to do is give myself a percentage map to work with; goals for how I want this money to work. For example, for all extra money that comes our way:
- 50% goes towards debt
- 25% goes towards financial goals
- 15% goes towards leisure
- 10% goes towards charity
You may want different categories, different percentages, or have different needs, and that’s okay! The point is…map it out! Have a clear map of what will happen with all the extra money that comes. This will give you peace of mind on where it’s going, it will lessen your anxiety because it’s taking care of some of your needs, and it amps up the joy because you will be enjoying some of it.
What if my spouse and I disagree?
I’ve been there! I know first-hand what it is like when your spouse has one idea for the money and you have another idea. If you wait until the money is sitting in your bank account, things could get dicey because…it’s already there, the money is waiting! Now you both feel pressured to do something and the only thing you know is what YOU want.
This is another BIG reason why mapping it out early is so important. Have a nice dinner and discuss what each of you would like to do with that money and then decide what works best for your family. It’s going to be a bit of a tango at first, but if you remain open, honest, and patient, you two will come to the conclusion that is BEST for your family. And who says you can’t do it one way this year and then change up the map for next year.
Give your money a purpose, so it can start working for you!
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