As you know, tax season is in full swing! If you have not already started preparing your tax return, you likely will be soon!
Before we jump into talking about the tax return, it is important to know that the IRS has recently stated Americans should plan to receive a smaller refund this year. The pandemic relief measures have expired, which previously increased the tax refund amounts for many Americans. Specifically, the child credits will go back to normal. So I encourage you to have measured expectations if you are planning to receive a refund.
And if you are planning to receive a refund, now is the time to begin planning for it because if you don’t have a plan for it, you may not be able to maximize its impact. Many times people get excited about having a little extra cash, and often miss the opportunity to shift their financial situation.
Simply put–if you always feel like you never have enough money, a surge of extra money can begin to kickstart this mindset shift and can be a catalyst for new, positive momentum and habits if you are disciplined with it. People who have a good relationship with money plan ahead what they will do with a surplus of cash so that they can continue to build wealth.
Even if you have never identified as someone who is “good with money” what if you started now?
Here are some ways that you can use your Tax Refund to shift your Money Mindset:
1. You can use it to start or grow your emergency fund.
Having a rainy day fund can take off a lot of financial pressure! Save yourself future drama by having some money set aside for the predictable, yet unexpected events life throws at you!
2. You can use it to pay down a debt.
Supercharge your debt payoff with your tax refund. This will allow you to see faster growth as you become debt free!
3. You can use it to invest in yourself to make a career advancement that would yield a higher pay.
Is there a training or course that would allow you to make more money at your job? Consider using the money to make an investment in yourself and to increase your overall compensation.
4. You can use it for retirement savings.
As I love to say, the market has taken a hit recently and so the stock market is on sale! Consider using your funds to purchase investments while the market is lower. Also, you have until April 18th to contribute to your Roth IRA for 2022.
5. You can use a portion to invest in financial coaching.
Financial coaching provides the plan and the accountability that many people find life-changing if they have struggled with finances.
If you are planning to receive a tax refund this spring, I am cheering you on to use it to make a positive step for your financial future!
