People seem to be firmly in one camp during tax season: it’s either the hardest time or the best time of the year. If you’re one of the millions of Americans who get a refund back yearly, you’re likely in the “best time” category. But, for many people, what seems like a giant check seems to slip right through their fingers. From catching up on bills to treating yourself, it’s easy to get carried away with your return. This year, instead of asking yourself where it all went, be intentional and maximize your tax return!
Know Before the Return
If you know how much you’re going to get on your return, you will be able to set more realistic expectations for it. For example, if you think that you’re getting $9,000 back, you might be dreaming of Disney trips and flatscreen TVs. But, when you know that you’re only getting $4,000 back, you can be more realistic in your goals for the return. Make sure that you file for your return as early as possible so that you can have a clear idea of what you’re getting back and how you can set your intentions for that money!
Budget the Money
Just like you’re creating a budget for your daily life, you can create a budget for your tax return. This is the single easiest way to learn how to set your intentions and maximize your tax return. If you know what you’re going to spend the money on ahead of time, you’ll be better able to stick to the plan.
Since having fun is almost as important as saving your money and getting your bills paid, it’s important to make sure that you make room in your tax return budget for a little fun. Even if it’s just $50 to go out to eat, get intentional and set that aside. Knowing that you have a little bit of money to enjoy will help keep you from overspending or taking money away from other areas.
Pretend Like It’s Not Coming
Yes, you should know that your tax return is coming and what you can do with it, but pretending like you don’t might actually help you avoid spending it. If you want to hang on to all or most of your tax return money, consider having it directly deposited into your savings account instead of your checking. Or, get a whole new account at a bank that’s not convenient for you! Don’t get a debit card with it, either. Doing this will make you less likely to go to the bank and take the money out impulsively!
Consider Investing It
If you really want to maximize your tax return, invest it! Even if you’re new to investing, there are small steps that you can take to make money off of your money. Small investments that start with something like your tax return can quickly add up and grow to allow you to make even more money.
If you don’t know where to begin, your tax professional may be able to help. Many CPAs are also financial advisors. If not, they usually have industry connections and can get you started with some resources.
Pay Ahead On Your Bills
Give yourself the gift of a more financially stable year with your tax return. If you’re behind on your bills, you can get caught up with them. If you’re not, consider paying ahead so that you’ll be able to help yourself stay ahead throughout the year. A word of caution using this method, though. If you pay ahead on your bills, make sure you don’t neglect to pay them during other months. Continue making payments like normal so you don’t get behind!
Don’t Get Caught Up in Spending
Before tax season even starts, try to avoid sales and other temptations that could make you want to spend your money. Many companies know that people get big returns during that time of the year and the email marketing efforts they do are close to or more than what they do during the holidays. These companies want you to spend your money on their products or services. Avoid the temptation! In fact, try unsubscribing to marketing emails before they have a chance to target you!
Pay Off Credit Cards
Credit cards can be a soul sucker…or they can be a really useful tool for getting your finances under control. If you have a lot of credit card debt, you’re likely paying for it in several ways. You’re paying a lot of interest, your credit score may be lowered, and you may be making the credit card companies a lot of money. Instead of using your credit cards irresponsibly, consider using them as a financial tool. You can see how we used our tax return to pay off a huge chunk of debt.
Paying off credit cards is one of the steps in eliminating your debt! Check out my video on this very topic!
Be Intentional to Maximize That Return
Of course, there’s nothing wrong with using a bit of your tax return to enjoy a new electronic item or take a vacation with the family. The key is making sure that you are intentional with the money you bring in, so that it serves you in the long run.
How will you be intentional with your tax refund this season?
