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Rewarding Yourself Along Your Journey to Financial Success

Financial Journey (featured column)
by Karen Kuebler

I’m a firm believer in rewarding yourself for hard work and a job well done. Working hard and saving hard can get pretty dreary if you don’t have some fun along the way. Over the years I have created some reward systems that help us enjoy our journey.

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I can get pretty goofy with some of my ideas. My ideas range from low-end (zero cost) to higher-end (spending money on myself). Take the ones you like and throw out the rest.

I really like *instantaneous* rewards. I get excited when I get coupons for freebies, so it doesn’t take a lot to bring a smile to my face. I keep a calendar on our bedroom closet wall. At the end of each day, I evaluate how we did with our financial goals. If we resisted impulse spending, found resourceful ways to do without, or thought of less expensive alternatives, etc. I place a star on the calendar. Yes, I buy those colorful stars like we used to get in Kindergarten when we were good. I guess it really made an impression on me, because I still love to give myself a star at the end of the day!

We have been budgeting an allowance for ourselves for years. I think this is *really* important. If you can only budget $5, it still is money you can choose to spend any way you want without having to answer to any one. Our allowance used to be pretty low. Sometimes we budgeted $15 or $20 each per month. At the time we retired, we were each taking a $25 per month allowance. We have continued to raise it over the years since we retired. This provides an easy solution when one of us wants to buy something that isn’t really for the household. My husband still tries to ‘weedle’ certain items out of household, but if that doesn’t work he will use his allowance!

When I retired my friends at work threw a party for me. One of my gifts was a great big fat piggy bank! It is very special to me because they all signed it and it was sort of representative of the way I had lived my life all those years before retirement. That was the example they always saw, and it had obviously made a big impression since they gave this to me as a gift. Of course the piggy bank was empty. But, true to form, I passed the piggy bank around and my friends contributed a bit of change. I keep it on a shelf in the closet and empty my change into it each day. I love to fill it up, count out the money, roll it up and cash it in for something special. It’s getting pretty heavy again. It’s fun for me to just pick it up and feel how heavy he is getting every once in awhile.

A few years before I retired, I created a "40 Months to Freedom Calendar" as we were working toward financial freedom. It was a celebration for me to draw a great big "X" in the box at the end of each month. I’m a huge fan of visual reminders of goals. They keep the rewards alive and in sight at all times.

Choose rewards that are special to your interests and tastes. Two of my favorite rewards are facials and massages! Sometimes when I’m working on a project that is taking a lot of time and effort, I will schedule a massage to look forward to at the completion. I tend to do this more when the project is earning some money! The reward should be commensurate with the work involved. If the task is something smaller, like organizing a room, then we might plan to go for dinner or to a movie at the end of the day. When the goal takes several years, such as completing my MBA, then a dinner won’t cut it! We planned a nice trip to Victoria once I had completed school. Obviously, you don’t want to short change your financial goals by spending all of your money. We’ve budgeted for these rewards because I really believe they are an important part of a ‘holistic’ approach to achieving financial freedom. We’ve been able to include them in our budget because we live our daily lives very frugally.

I keep a ‘creative savings jar’ on a shelf in our closet. Every time we think of a way to spend less on something we were going to have to purchase or a service we needed done, I calculate how much we saved and put the difference in the jar. By doing this, it is amazing how resourceful we can be. We’ve come up with alternative ways to do things, have meticulously shopped sales, and have postponed purchases until we find more cost effective solutions. The money really can add up. In the month of March we accumulated $100 in the creative savings jar. I colored my own hair, saved $30, and loved the way it turned out. We were very conservative with using the car and only used one tank of gas for the month. We put the cost of one tank, $25, in the jar. We both needed tennis shoes, but waited for a sale. We found a great sale --buy one pair, get the second pair at half price and saved $15. We had guests come in from out of town and I prepared chicken picatta for dinner. I figured we saved $20 by not going out for a dutch dinner. Probably a conservative estimate on that one ;-). I like keeping the money in a jar so I can *see* it. Once we save a few hundred I deposit it into an interest-bearing money market account. Then we start filling the jar again. We think of something special we want to apply the money toward, which fuels the motivation to save more.

When we retired we started having the dividends earned from our stocks paid directly to us. We previously reinvested the dividends in more shares. This is our taxable stock account, and we have to pay taxes on the dividends even if they are reinvested. We decided we didn’t need to purchase more shares of these stocks at this point, and we now use the dividends as a *reward* for our hard work and savings. The money goes into an ‘entertainment fund’ which we use for our recreational activities.

We’ve always made a ‘game’ out of saving for something special we might want to purchase that will take a chunk of money. We’ve been doing this for the last 20 years. We used to hold garage sales and sell items through the classifieds. Now we have Ebay! It has been a wonderful way to simplify and declutter and get paid for it at the same time. If I earn money through a consulting assignment, I will put that towards the special purchase. My husband has done lots of car work, body repair jobs, and other types of work to earn extra income. He will also sell some of his collectible items that are sitting on a shelf, hidden from view. We make trade-offs. Will the new item bring more pleasure and/or value to us than the item we are going to sell? If yes, then sell!

My favorite *reward* is ‘profit sharing.’ I compare our personal finances to running a business. At the end of the year, if we have lived within our budget the full year, we should have a surplus. We play a game each month of ‘beat the budget.’ Our incentive comes at the end of the year when we divide the surplus into three piles. My husband gets one, I get one, and we put the third into an ‘entertainment fund’ for the following year. Think about it. Every time we make a purchase, my husband says "Am I willing to pay a third of this out of my pocket?" This has worked great for us! And, it makes sense. If we’ve stayed within our plan all year, we have already put money aside for savings. We’ve worked hard and saved hard. Isn’t that what profit sharing is all about?

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Copyright © 2002 by Karen Kuebler. All rights reserved.

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