Saturday, 9 February 2013

Found Money

Mid January I explained various methods of dealing with spare change, as well as my own preferred method, in a post called “The Piggy Bank”.  In that post I also explained that I considered any money over the amount of $10 to be “found money” instead of spare change.  I subsequently promised you a post on that subject, so here it is. 

To start off with what is found money?  Where does it come from?  I consider found money to be any money that comes your way that is not a regular portion of your wages.  Regular payments that are not part of your wages such as part time jobs or insurance payments can be considered found money depending on your individual circumstance.  If you took a part time job to make end meet it wouldn’t be found money and would be put in your monthly budget.  If you are receiving disability insurance but can live on your paychecks (which is my situation) it could be considered found money.  Irregular payments are things such as HST/GST rebates, cash back rewards from credit cards, interest earned on your first month’s rent deposit, gifts, money made selling crafts (as long as this isn’t your day job) . . . the possibilities are endless. 

At some points you may see very little of this found money coming your way.  Though if you keep a track of it you may find out that there is more coming you way then you think.  Since the first of November I have seen $526.80 of found money; and this does not include gifts (I respect the givers wishes and spend it on what they tell me too) or my disability insurance (which I will talk about later.)  Skeptical?  Here’s the breakdown:

Christmas Bonus - $176.31
Provincial Tax Refund - $56.13 + $56.13 + $56.13 + $99.25
Gas refund from volunteering - $22.85
Cash back on credit card - $60

Not bad for three months.  The problem with this trickle of cash is that it is above and beyond your budget.  The moment it lands in your bank account you start thinking about all the wonderfully awesome stuff you can buy with it.  Then out it will fly to fulfill a want, completely unaccounted for. 

How can you make sure that this money is not being wasted?  I suggest you make a list (in your head or on paper what ever works best for you) and set out your priorities.  Then put your money against the list in order of importance.  I’m not saying that you can’t spend this money on a new iPad but if your first priority is paying off your mortgage and the second is a new iPad then you may want to split your found money.  Put 75% towards you mortgage and 25% towards saving for a new iPad. 

My list looks a bit like this:

Property taxes (yes I budget for these but I bought my house in November and get to pay taxes in February and June, so it has been a bit of a scramble)
Emergency Savings (which has next to nothing in it at the moment) 
Mortgage (Gone by November 2017, or else!)
RRSP (I like the idea of retiring in palatial comfort)

While the list is more or less in order of priority I do my best to keep things balanced.  For example, my disability insurance has all been earmarked to go towards my mortgage and my federal tax returns will always go towards my retirement savings.  Once property taxes are taken care of most of the found money will go towards beefing up my emergency savings. 

The list of priorities is highly personal and is simply intended to insure that your found money is not wasted.  All of the items on my list (well maybe not the taxes) give me a great sense of accomplishment and joy as I work towards my goals. 

Do you track your found money?  Where does it go?  

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