How many people have you heard lately say “I am going to buy that when I get my tax refund?” For many, tax refund season means that they can catch up on bills, buy their kids new clothes, or finally fix that leaky roof. According to SmartAsset, the average household federal tax refund in 2014 for Nebraskans was $2,502.00. Tax refund season always seems to come just at the right time. Receiving W-2s can be more exciting than opening presents during the not-so-distant holidays. For me, I have to be conscientious with how I am going to spend my tax refunds because I always dream big.
Each year, my wife and I devise a plan for how to spend our tax refund money. One year, it was a new laptop. Another, it was for a down payment on a new car. This year, we are going to spend it on some home improvements and repairs. The refund can be spent quickly, leaving you with a feeling that you never received the money to begin with. I understand how expensive supporting a family can be. When receiving a large sum of money, it is tempting to spend it without much thought or consideration.
When determining how or what to spend your tax refund money on, it is helpful to write a list, splitting it into items you need and items you want. An item of need supports your or your family’s health, wellness, and safety. All else may be considered an item you want, but do not need. I try to focus my attention on items of need.
For each item, writing down the estimated or anticipated cost helps you determine the best way to spend your tax refund. A wise part of your plan should be to save a set amount or percentage of your tax refund for miscellaneous expenses that pop up throughout the year. Click HERE for a form to use to plan how to use your own tax refund money.
It takes discipline to hold yourself to these standards as you’re making decisions. You may want that smart TV, but your car really needs new brakes. Yes, a puppy is much cuter than a repaired plaster ceiling in the playroom.
During this time of year, you may be looking at your financial situation for the first time since receiving your last tax refund. For my family, I try to have the mindset throughout the year that the tax refund is not guaranteed. I avoid incurring debt thinking that I will pay off the charges with my tax refund because life is adept at throwing curveballs. Planning for how to spend my tax refund reminds me that mindful money management can be easier said than done. However, taking control of your finances through intentional planning allows you to adjust as life throws those curveballs. Taking the time to make tough financial decisions will empower you throughout the year.