“Make all you can, save all you can, give all you can.” ~John Wesley
You can only spend a dollar once. Seems obvious, doesn’t it? But have you ever gotten a bonus or a cash gift and thought of all the things you could do with it and then realized that you spent it in your head five times over? When it comes right down to it, we can only do 4 things with our money- Live, Give, Owe, or Grow.
Makes sense then, to limit the dollars flowing to the least productive areas and redirect them to the places we would rather use them.
We have to live, so there’s only so far we can shrink that area, but we can be intentional about spending in ways that give us the greatest return- whether it be from keeping the heat on to spending on a family vacation that provides lifetime memories.
Growing of course is critical too, because we need to be wise and save for a rainy day and for the non-working times in our lives. Giving may seem like an area to forego, but there is an intangible return on generosity. It gives us perspective by taking the focus off of ourselves and onto others, it helps keep our grip on the material things of the world loose, and it does good for the world around us.
That leaves us with the “Owe” category. Controlling or flat out eliminating debt not only frees up the dollars going to pay down that debt but also the interest cost to servicing the debt. Taking on excessive debt presumes upon the future and can rob us of opportunities down the road.
The other half of “Owe,” taxes, are a necessary part of living in our society, but that doesn’t mean we should volunteer to pay more than we are required to. We’ve been on a sort of autopilot for the past many years regarding tax law and what deductions we can take, but with the new Tax Cuts and Jobs Act, the personal income tax landscape has changed. So shifting that piece of the tax owe pie over to living, giving, or growing may not be as automatic as it has been before.
Read about the tax cuts here.