Reported by Bahiyah Shabazz, MBA
While the majority of Americans receive refunds and many taxpayers look forward to getting that check in the mail, it’s sometimes easy to forget that it’s your own money to begin with. All you did was overpay the government during the year.~ CNN
Each year consumers are very excited about filing their annual taxes in hopes of receiving the biggest check ever. As previously quoted, the funds are actually yours to utilize. Instead of you managing your own monies, you chose to “donate” more toward your exemptions.
Why wouldn’t you earn more interest on your hard earn money instead of giving it away for someone else to earn? That’s exactly what you’re doing. When you choose your electives on your W4 form every year, you can indicate the amount of money you want the government to take from your paycheck. Think about it. The money that you receive after April 15 can earn interest all year around. It can be in a high interest bearing savings, Roth IRA or paying toward debt. I strongly suggest you change your exemptions to reflect an increase in pay.
Once you increase your pay; take the difference and deposit into a savings account or apply toward your debt to eliminate quicker.
Now that you have your check in hand don’t think of the million ways to “treat yourself”. Tax season is a period when retailers openly embrace its consumers and increase prices. The emotional feeling of impulsive shopping is burning through your chest cavity.
First, reflect on your current financial situation, your future retirement and possible children college fund. If you’re not where you want to be then your tax refund should go toward a more effective use than purchasing a wardrobe, window treatments or the new iPad. The best return you can have on your money is the return on yourself. Knowing that you made a prudent decision to move forward with your finances will allow you to sleep better at night.
With money in you pocket, you are wise and you are handsome and you sing well, too. ~Jewish Proverb
Now that you’ve contemplated about your money and ways to stretch it for financial success; you can begin your plan.
Take your Tax Refund and…
1. Open a Roth IRA
2. Build your emergency fund
3. Pay toward your debt
4. Open a college plan account
Some people would love to do exactly as I’ve suggested, but may not be able to make day-to-day ends meet. If not, take your tax refund and pay your bills for the next 4-6 months. Now that you are ahead of the curve; pay what you can monthly toward your bills as you’ve always done. The household utilities will reflect a credit on your statement. Don’t get too excited, just continue to pay as normal. You will be able to make ends meet until the next tax filing.
“Love Yourself Enough To Support Yourself.”
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