What’s the best way to spend your tax refund?
Isn’t that the $68.00 question? The first time I got a tax refund, it was $600. I had no clue what it was. So naturally, I got a goofy grin on my face, waved it around to no one in particular and spent it.
I don’t profess to have the best technique for spending your refund money. But when I look back on my first tax refund, I have no clue what I spent it on. Nor the one after that. It was my “zero plan” method.
If you want to be more intentional with your refund, try this 3 step formula:
- Save: I challenge you to put away at least HALF of your refund. Can you save more?
- Do you have $1000 set aside for emergencies? If not, do that. I cannot tell you how many times my Financial Peace University students say how great it feels to have $1000 in savings (often for the first time). It’s a powerful safety net.
- Already have $1000 saved? Time to slice some debts. Here are some strategies we used to pay off debt in 2012.
- For a full list of other saving options, read Dave Ramsey’s 7 baby steps here.
- Give: Review the last 30 days. Who came into your life with a need?
- Do you attend a church that has a benevolence fund?
- Have you ever sponsored a child in a third world country? Compassion is one great resource. Our sponsored child lives in Haiti. For $38 per month, Compassion provides her with schooling, healthcare, Christian education, and daily supplies like pencils, clothing and a toothbrush.
- Spend: Plan ahead together and agree on set amounts for each of you.
- Date night? Yes, if you’re debating. Date your spouse (just don’t live at the movie theater, like we used to).
- Family fun night? I’d love for us to go to the local trampoline park, but the baby never seems enthusiastic when I bring it up with him.
- Hobby? Mini shopping spree? Jamberry? This is where you have that freedom. It’s planned and budgeted.
Turns out we gave a little more than usual in 2014. And we had a kid. The government seems to give you a higher refund when you donate and procreate*.
Go Team Harris.
*Don’t get pregnant for the annual tax break. You’ll end up on Dr. Phil. The 2017 tax bill might sound a bit more favorable but that just isn’t a good reason to get pregnant.
All that to say, we just walked through this 3-step process. Life’s not all about penny pinching. Go have some fun.
I speak from experience when I say that doing all 3 of these steps together truly is FUN.
ACTION STEP: File your taxes. If your tax refund is already spent, apply these 3 steps to your next paycheck.
Join the discussion: What’s one thing you did or will do with your tax refund this year?