For those who get a refund - what do you plan on using it for? Paying off debt, setting aside a nest egg, or a big screen tv and new iPhone? How you use your tax refund will define how your financial security goes the next year.
If you live paycheck to paycheck and do not have a savings account you should automatically stick at last half of your refund into a savings account. This gives you a cushion for the whole rest of the year to draw from during an emergency. If you have debt, the other half should be used to pay on it. It may not sound fun but it will give you a sense of relief the whole year through.
If you have a list of needs (new tires for the car, washing machine, clothes for the kids, etc.) be sure to get them now when you have the money to do so or put it into savings and shop around for awhile for the best deal. Wouldn't it be a terrible financial decision to purchase an iPhone just because you want it and have to use a credit card later to get the items that you need?
Remember, tax refunds are not a windfall, but rather money that you overpaid that you are now getting back. It is your hard earned money and receiving a chunk of money at once can help you quickly build your savings or pay off a debt or two. Spending it wisely will help cushion you throughout the year and relieve some financial stress.
Also, for those under a certain income, you are able to go through Turbo Tax online and do your Federal Return for free (and I think that state return is less than $30). It is quick, very easy, and much less expensive than paying someone to do your taxes. Unless you have several deductions or other unusual taxes it doesn't make sense to pay someone to do a simple Federal Return for you.
We get to spend our return this year on medical bills (fun, fun!) but I am thankful for that leeway, which should help ease our financial burden this year.
Basically, if you aren't set financially yet, use your tax refund to help build yourself a safety net this year. That may mean that you won't be able to purchase a fun gadget or toy this year but the stress that it takes off your shoulders will be well worth it!
I am so annoyed with taxes this year!!! I filed mine SOOOOOOO long ago, but the IRS just accepted them. So slow with my refund!
ReplyDeleteRamblings of a Suburban Mom
I did ours at the very end of January and they were accepted right away and I received our refund like a week and a half later! I was pleasantly surprised at how quick it was. My mom waited until a few weeks later to file hers and she is having the same problem as you now!
ReplyDeleteI filed my taxes Feb 1st and received both my state and federal back within 5 days. Our refund the last three years has been used to fund our adoptions. We leave in 30 days to get our new son!
ReplyDeleteMost of ours is going into savings... At least 2/3 of it. Hubby's getting some "mad money", but the rest is getting tucked away for later... Oh, $1K is going into an RSP. :)
ReplyDeleteLeah - An adoption is a VERY worthy thing to spend income tax refunds on! How exciting - congratulations!!!
ReplyDeleteCarla - Once you have a nice savings set up it's nice to be able to use some of that money for a *want* instead of just a need! What is an RSP?
When we get our refund we save it to pay for our property taxes in the fall, that way we know the money is there to pay those taxes. From one hand to the other.
ReplyDeleteIt's not fun being a grown up sometimes! I like how our mortgage payments also include the escrow payments for the insurance and taxes...that way we pay one set amount each month instead of a lump sum each year. Just easier for us that way!
ReplyDelete