It is that time. Tax refunds will soon be pouring into bank accounts all around. It is always nice when the government decides you can have your own money back. It is YOUR money. If you have any doubts about that, watch a self-employed person write out that quarterly tax check. It is painful to see it go. So delight when you see YOUR money return to your wallet.
A little extra money can be cause to do something extravagant. It could be cause to spend on things you would not normally consider. It could also be the key to jump start a change to financial freedom.
Top Tips for Tax Refunds
- Get the whole family invested. Each person played a part in the tax refund. Give back to each family member a piece of the pie. Let this be the only “spending money” that comes out of the tax refund. Encourage the kids to work as a family to get those extra items that the family has discussed (like a new television, couch, or maybe even a vacation).
- Set aside a portion for emergency use. The goal for an emergency fund is a full six months of monthly payments (the must haves) set aside in a designated account. Putting a portion of your tax refund towards this account can begin to move you in the right direction.
- Pay off or at least pay down any debts that are owed. Interest payments end up costing more than the original item in most situations. Attack the debt by paying down the smallest first or by going after the one with the highest interest rate.
- Use a portion of the refund to begin creating a long term savings plan. This will be money that you will only access five, ten or twenty years down the road.
The little steps will lead to big changes. By looking at YOUR money as an opportunity instead of a windfall, you can begin to map out financial success for your life.