It’s refund season and the majority of us are expecting a nice check from Uncle Sam. But before you begin earmarking your tax refund let’s stop and consider a few things. Are you putting your tax refund to work, or will it burn a hole in your pocket? This weeks post covers a few money management tips for those wanting to make the most of their refund this year. Buckle up!
Can we establish a few things? There are 2 points I’d like make in this post.
- Your tax refund isn’t a bonus check.
- You need to have a strategy for using your refund.
Your tax refund isn’t a bonus check from Uncle Sam. But it sure can feel like it right? Actually, it’s money that’s already yours, so treat it like any other payroll check.
For Example: Let’s say you purchased a TV for $1,100 and later returned it for a refund because you needed the money. The money was yours before you bought the TV. When you return the TV for a refund it was clear the money was needed elsewhere. After you received the refund you probably had good intentions and had a very clear strategy for using the refund.
Changing how we see our tax refund is a game changer. It’s not a bonus check, it was yours and it’s now refunded to you.
Are you starting to see your tax refund in a different light? Terrific!
Now you’ll need a plan for using your refund. We are talking about strategy, but why? Because if you don’t have a strategy for your refund than all the good intentions in the world will mean very little. Each one of us has an idea of how we’d like to use our tax refund. In addition, I’ve laid out a few big ones that you might find helpful. By the way, all of these will potentially help your credit score and reflect nicely on your credit report.
- Pay Off Some Or All Of Your Debt – Always pay off small balances first. Here’s the thing… If you have debt but only save (but don’t pay the debt), it’s like borrowing money from yourself; it doesn’t move you forward.
- Start An Emergency Fund – An emergency fund is just that. One surprise can send you into a debt spiral and can take a long time to climb out of. An emergency fund is a great contingency, and it also gives you peace of mind.
You’ve probably noticed that my point is to use your tax refund for something that will make a difference in your life, not leave you with regret a few weeks after receiving your refund.
Big Idea – the choices you make now will determine your quality of life 6 months from now. How so? You can simply look back to see what I mean… The quality of your life today only reflects the choices you made 6 months ago. The proof is in the pudding.
Stay thirsty my friends