In order to have the garden you want, you can’t just plant it and leave it. You’ve got to tend to it: weed it, feed it, water it, care for it. Your financial wealth is similar to a garden. You just can’t “plant” it and forget it. Tax season is a great time to do a check-up on your financial garden. You’ll get in the habit of doing this the same time each year at the same time you’re gathering your tax information. It’s the perfect season to revisit how much money you actually need for the lifestyle you’re living, and see what’s left after that and income taxes. How many times have you asked yourself when seeing your tax return, “I earned all of that money?  Where did it all go?”.  Caring for your garden can find you a lot more “green” (cash!).

In my experience, people often underestimate what they spend and how. We had a couple who judged that their household spending was $600,000 per year. But when we looked at what they earned and what they paid in taxes, we found that they could not account for some $200,000. Once that cash flow spending is accurately determined, we can see more clearly what is needed, where the problems are, and even more important, where the opportunities lie. It’s easy in today’s hectic world not to pay as close attention to where your money is going and how much of it is going. Sometimes it’s going places you aren’t even aware of. When this is pointed out to someone, they often realize, “I don’t really need that,” or, “I’m overpaying for this,” and we can find them more cash flow.

 

An example is home insurance — especially for someone who owns more than one or two homes. We’ve had clients who, unbeknownst to them, were paying $30,000 for their home insurance. They didn’t realize that when they’d made a claim two or three years ago, the insurance company didn’t like it and had jacked up their rates. Too often these kinds of bills are put on autopay and never reviewed. In this case, the client saved over $20,000 by getting other insurance companies to bid on their policies.  This is a lot of “green”, isn’t it.

 

Another place to check to see where your money is going is with your benefits. Take this executive who, because he didn’t understand the benefits his company was offering, like pension or savings plan choices, wasn’t actually fully participating in them, even though he thought that he was. He came to see us when he was in his late fifties and had been working with his company for a long time. We pointed out to him that there was a particular deferred compensation plan that would allow him to put away his total bonuses for the year. This strategy would save him over $200,000 a year in taxes. He didn’t need all the pay he made, and this way, he could add another $200,000 or more per year to his savings without even feeling it—a nice investable cash fund. More “green” by caring for your financial “garden”.

 

For more tips on finding more “green,” visit tswealth.com.