Every year when you file your taxes away, you look forward to the big chunk of money you’ll be getting back afterwards. You could do anything with that much money! But you’ll probably end up just spending it on food and movies and clothes. This is why many of us come to abhor the tax refund, and would much rather get that money over a long period of time than all at once. Here’s how to take care of your tax refund when it comes.
By the Numbers
In 2011 the average tax refund was close to $3,000. If that money had been divided up over the year, Americans could have been taking home, on average, about $250 more a month. The only way to keep this money safe in your wallet is to start your taxes early, and work with a professional to fill out new W-4 forms and have the proper amount of tax money pulled out of your paycheck.
Before you accidentally spend your entire refund this year on just eating out, keep track of the money that you get back. Put it in a separate savings account while you create specific goals for it. Plan to spend it to help you get out of debt, or to pay for your schooling. Plan to use it for study abroad or buy the car you’ve been eyeing.
Keep Your Eye on the Ball
Once you have made a goal for yourself, stick to it. Do not be tempted to spend a dime elsewhere. As long as your goal is responsible, let yourself achieve it by saving money and spending it at the right time. During that time of year there are many deals available as businesses are aware that people are starting to get their refund money back and have more money to spend. However, do no settle for a deal that may take away a substantial amount of your money.
Do not underestimate the power of an emergency fund. Even if you have insurance, it is important to always have back-up money for any reason. You never know what could happen and you would hate to be caught in a tight spot with limited options. Give yourself a fall back plan that you can contribute to and rely on every year.
Contact the Professionals
If you have trouble saving large amounts of money, it would be in your best interest to contact a tax professional in order to get started on avoiding tax refunds in the future. You will instead be able to save this money over time, giving yourself more options all year round, not just in April. One of the services offered at Check City is access to these professionals that can change the way you budget entirely. Contact us today to find out how you can be saving money all year long, or how to prepare yourself for a large tax refund this year.