Leaving Money on the Table

It’s tax time once again and I know all of you are scrambling to get that information to either prepare your own return or take it to a tax preparer. I prepared about 100 tax returns for some of my clients every year since 1983. It amazes me to see the various ways that people organize their records. There are all sorts of systems from the basic throw all the receipts in a shoe box and deal with it later to sophisticated spreadsheets and tax software. Everyone thinks that everyone else has a better system. The truth is – the best system is the system that works for you. I remember a well to do widow that had various envelopes with receipts in them that were labeled in alphabetical order inside neat bank boxes. Then there was the young engineer who came in with a very detailed and complex spreadsheet that he had used to put all of his information in. When I asked the widow for totals and information, she readily found the right envelope to give me an answer. When I asked the engineer for certain information, it took him minutes to figure out his own data in his own spreadsheet. The point is that it doesn’t really matter what system you use to keep your financial records. What matters is:

  1. you have a system in place to keep important records and you know how to use it
  2. you use the system often and keep it up to date and backed up
  3. you can get information from your system to make important financial decisions

I have worked with very wealthy people and very poor people and one of the dividing lines that makes the difference is that wealthy people take the time to save a dime. The most precious resource that we have is time. And everyday we make decisions about how we want to spend our hours and days. We live and die by those decisions and their consequences. When we don’t take the time to find all of our receipts for our tax preparer, we leave money on the table (no deductions equals no tax savings). When we don’t take the time to shop for the proper mortgage, we leave money on the table (saving a quarter percent could possibly save you $6,000 on a $400,000 loan). When we don’t understand our 401K and fail to make tax deferred contributions, we leave money on the table (less earnings get taxed so we get more back). When we don’t take the time to read that insurance policy and disaster strikes, we leave money on the table (no coverage means more out of pocket costs). When we get the wrong kind of credit card because we didn’t take the time to read the fine print, we leave money on the table (higher interest means more cash out of your pocket). Got it?

Okay, so it is boring and you can think of a lot more fun things to do with your time — but these actions pay you money and we all don’t mind getting a little more of that.

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