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It’s tax season. Sometimes, I think that this the time of year that I love my little tax deductions…ummm, kids…the most. If you haven’t finished your taxes yet, make sure to look for some tax season deals to save money on tax preparation software. If you have turned in your return and are one of those fortunate enough to receive a tax refund this year, make sure that you are smart about it and use that refund to its best advantage. Here are a couple of tips.
Plan for Periodic Expenses
There is nothing harder on a tight budget than thinking you’ve finally got a solid month ahead of you and, then, receiving that seemingly huge bill for an annual or semi-annual expense. Our vehicles are really what do us in. Insurance is bad enough, but in Virginia, we also pay a personal property tax on our vehicles. Those periodic bills really throw off out monthly budgets. When we get a return, we approximate our premiums and personal property tax bill and move it right over into savings so that we know that we have the money to cover those expenses.
Treat Yourself
While it’s easy to feel like your tax refund is a sort of gift, just remember…you earned it! A tax refund just means that you paid more in taxes than you actually owed. We’ll take about 10% of our return and enjoy it. That could mean a weekend get away somewhere or a monthly date night fund. Whatever you do, make sure that you use some of your hard-earned money on yourself!
Save, Save, Save
If you have anything left after treating yourself and planning for those pesky periodic expenses, be smart and save the rest of it. Saving comes in all sorts of forms these days. For us, it may mean paying down (or paying off) a credit card. Paying less interest on past purchases is a great way to help speed up debt repayment. For you, saving may mean bulking up that rainy day fund or even making a few smart investments.
If your budget is tight, the last thing you want to do is frivolously waste your tax refund. Use a little discipline and make some smart decisions and you can really stretch that refund until the next tax season rolls around.
Have you finished your taxes yet? How do you make the most of your tax refund? Leave us a comment and share your story.
The suggestion to reserve about 10% for fun stuff is great – it’s difficult, at least for me, to commit to using *all* of refund sensibly.