Money Fasting for Lent

Many people observe the season of Lent by giving up something during the time between Ash Wednesday and Easter Sunday.  It is a religious practice that has gained popularity even among non-religious people.  I only mention this because it can be the perfect time to go on a money fast.  Money fasting is not buying anything but basic necessities for a period of time.  After the monthly bills are paid, only purchase items that are absolutely needed.  This includes food and toiletries, first aid or medicine that you run out of. 

For this to be effective a household must commit for a period of time (a week, month, or longer).  The purpose here is to squeeze additional money out of your budget and put it all toward the goal you are working on.  When fasting is a mutual decision, it minimizes arguments.  Family members can keep each other accountable.  It can also lead to a lifestyle shift toward simplicity.

• Account for every dollar in your budget.  Put the excess on the goal your household is working on (emergency savings, debt pay down, saving for large purchase).  This amount is in addition to what you already pay.

• Start with a manageable amount of time.  The purpose is to allow an opportunity to think outside the box or break bad habits; not to torture people.  If a week is the agreed upon time, it can mutually be renewed for another week later.

• Do not go on a spending splurge as soon as the fast is over.  Resume a regular budget and continue to track spending.

This type of fasting can be done anytime through out the year, but Lent is an opportune time.  The sacrifice made carries with it the reward of progress.  If your family makes it through the 40 days, your Easter celebration will be even more joyful.

Is a Tax Refund Coming Your Way?

A tax refund can feel a bit like winning the lotto.  There is a rush of euphoria, followed by a shopping spree of ideas where that money could go.  If you expect a refund this year; instead of going on a cruise or buying a new TV, decide to create a more stable foundation with the windfall. 

• Plan where the money will go before it comes in.  This allows you to sleep on it for a while.  If something does not feel right, change your decision and sleep on it some more. 
• Use percentages.  If the actual refund amount is unknown, decide where the money will go based on rough percentages.  One year we decided to put 50% on debt, 25% in emergency savings and 25% toward all holiday gifts for the coming year.
• Do what feels comfortable to you.  Do not put all your money on a debt because it seems like the right thing, only to worry all year because there is no cash if a big medical or car bill were to happen.  Wait until your head and your gut (and your partner) are all in agreement before you act.

A tax refund is not free money.  It is money you worked for and loaned the government (interest free).  This irregular income is an excellent time to get ahead on a goal.  Investing in financial goals, rather than the newest gadget, will always lead to building a more secure future. 

What Can You Live Without?

Now that you have identified a financial goal, the easiest way to start funding it is to find something you can give up.  Maybe you have a membership you never use or a subscription you really don’t have time to read.  You can get rid of both, the expense and the guilt of not having time, by canceling it. 

If we all dig deep enough, we can find an expenses we pay for but get no real benefit from.  For us it was cable.  I gathered the family around the dinner table one evening.  We discussed other ways to get our entertainment needs met.  Then we took a family vote and decided we could all live without it.  That was over five years ago.  During that first football season I had to remind my husband that this decision was temporary.  But after seeing progress on our goals, even he is not ready to start paying for TV again.

Here’s the trick:  after the unnecessary items(s) are located, figure out how to move its monetary amount directly onto your goal before it disappears.

• Mail a check to the bill on payday.  Get it out of your account as soon as possible to avoid temptation.  Have a stack of envelopes addressed and ready to go.  Write the dates you want each payment to be mailed in corner where the stamp will be placed.  This helps to avoid confusion and is easier to keep track of.  You can set up months of payments in a short amount of time and then just cruise on autopilot.

• Set up direct deposit or automatic bill payments.  Most bills and savings accounts can be managed with out paying the stamp.  Make sure you account for these automatic transactions in your checkbook register, budget, or personal finance software to avoid a mathematical catastrophe.  Software makes it easy with the memorize transaction feature.

No matter what financial goal you are working on, keep your eyes open for a regular habitual expense you can live without.  Turn that money drain into an opportunity to get ahead.