Saving your tax refund
Don’t let your refund slip away.
By the time some of you read this article, you may have already received and spent your tax refund. If you have not spent it or have not yet received it, stop and reflect. Do you have a plan to spend your tax refund? Do you plan to save some of it?
First, determine how you will prepare your tax return. You may choose to purchase tax software, do it yourself with paper forms or seek assistance. There is Volunteer Income Tax Assistance (VITA) available. This is a free service available to qualified individuals. If you have a low income and need help, contact a VITA representative close to you.
Once you have completed your taxes, if you are planning on a refund, you may want to resist the urgency offered by some “refund in advance” programs offered by tax preparers. These are loans that come with hefty fees and can greatly reduce the amount of your refund. In addition, you have not had the opportunity to plan you may be more apt to spend it on items that you do not need. It may be helpful to do something as easy as jotting down some items that you would want to purchase with the refund. Look at the list and do a quick reflection. Determine if each item is a “want” or a “need” and then prioritize the list putting needs first, then wants. You may be able to avoid costly mistakes and even find some extra money to save.
If you take time to write a plan, you will have a written goal for your refund. A S.M.A.R.T goal is something we want to achieve that is Specific, Measurable, Achievable, Relevant to our needs and dreams and is Timely. Take a little extra time and make your goal S.M.A.R.T. If you want to be a bit more deliberate, try using a goal writing template. What are your needs and wants? Do you have an emergency fund? Do you need a little income boost before you find that high paying job? Remember, there is usually a gap in between starting a job and receiving the first paycheck. Part or all of a refund may fill this gap. These are all possible uses of a tax refund. You decide. Resist impulses and make a plan.
Making financial changes can be difficult. You may have goals, but you may not be sure how you can accomplish them. Sometimes it helps to have help from a professional. To contact an expert in your area, visit http://expert.msue.msu.edu In addition, helpful information in regard to making a spending plan and saving money can be found at mimoneyhealth.org.