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TODAY ON REASONED REFLECTIONS:

• Articles 💰;

• Market Movers 📈;

• The conscious spending plan;

• Fun fact of the Reflection 🗓️;

• Quote of the Reflection 🧐.

ARTICLES 💰

Time for a bit of R&R

• Life changes

  My Take - Certain life changes can have a big impact on your taxes. After each one, it’s worth reviewing how that change affects your tax situation. Updating your withholding throughout the year can help you put more money in your pocket now or avoid surprises when it’s time to file your return.

• Beige flags only

  My Take - Getting audited by the IRS sounds like a nightmare. While there’s no guaranteed way to avoid an audit, knowing the red flags that can trigger one can help you minimize the risk. A little extra caution now can save you a lot of stress later!

• 529 pitfalls

  My Take - 529 plans are a popular way to save for higher education. The tax advantages make them an attractive option for long-term savings. However, it’s important to be aware of the potential pitfalls.

• HSAs are the best!

  My Take - If you’re eligible, HSAs are one of the best savings vehicles out there. They offer a triple tax advantage: tax-deductible contributions, tax-free growth, and tax-free withdrawals. Oh, and you’ll also save on FICA taxes.

• Trust the process

  My Take - Everyone on social media seems to be crushing it. Or at least, that’s what they want you to think. Tune out the noise. Stay focused on your goals, keep making smart financial moves, and don’t let someone else’s posts make you feel behind.

📈 MARKET MOVERS 📉

Data was pulled from MarketBeat as of March 19, 2025, based on the preceding 7 days. It includes U.S. NYSE and NASDAQ companies, covering all sectors, and focusing on large-cap stocks ($10b+ market cap).

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REFLECTION No. 27: The Conscious Spending Plan

I - Issue: What’s a conscious spending plan? 

R - Rule: A Conscious Spending Plan (CSP) removes the stress of budgeting and the guilt from spending by helping you focus on what matters most while keeping your financial life in order.

Ramit Sethi, author of I Will Teach You to Be Rich, created this budgeting method.

A - Analysis: Unlike traditional budgeting, which often feels restrictive, the CSP is designed to give you freedom if you prioritize key financial categories first. The plan divides your spending into four categories: fixed costs, investments, savings, and guilt-free spending. 

Fixed Costs

This is the non-negotiable part of your budget and covers the essentials that keep you housed, fed, and functioning. Similar to the 50/30/20 budget, typical fixed costs include:

• Housing

• Car payments 

• Loan payments

• Groceries

• Insurance

• Utilities

• Subscriptions

To avoid going over the allotted amount here, it’s wise to add a 15% buffer to cover price increases or unplanned expenses throughout the month.

Investments

What does your financial life look like 30 years from now? No one knows for sure, but your future self will thank you for thinking ahead.

The CSP recommends investing at least 10% of your take-home pay in long-term accounts such as:

• 401(k) contributions (or equivalent workplace retirement plans)

• Roth IRA or Traditional IRA

• Brokerage accounts

While you could include your employer match, it’s best to exclude it if those contributions are subject to vesting since you don’t fully own them yet.

Savings

The CSP suggests putting 5–10% of your after-tax income toward emergency savings and short-term goals.

Your first priority should be building an emergency fund with 3–6 months of living expenses in a high-yield savings account. After that, other savings goals could include:

• Down payment for a home

• Extra retirement savings

• HSA contributions

• 529 college savings plan

At first, 5–10% might not seem like enough, but once your emergency fund is established, you can reallocate money from other categories (like guilt-free spending or fixed costs) to boost your savings here. 

Guilt-Free Spending

This category allows you to enjoy life without guilt.

Whether it’s dining out, shopping, hobbies, or entertainment, this category ensures you can spend money on the things you love without feeling bad about it—as long as you’ve taken care of the first three categories.

Examples of guilt-free spending:

• Dining out & takeout

• Concerts, movies, and events

• Vacations

• Hobbies & personal interests

The key here is intentionality. This money is meant to be spent. So yes, go ahead and buy that daily latte, but don’t let this category get out of control.

C - Conclusion: The CSP helps you prioritize what’s important while automating savings and investments. Instead of feeling guilty about spending, you can enjoy your money. 

FUN FACT 🗓️

On this day in 1963, Alcatraz closed its doors. Read more about that here. Oh, and if you haven’t been, Alcatraz is definitely worth visiting if you’re ever in the Bay Area.

QUOTE OF THE REFLECTION 🧐