3 Ways to be Intentional with Your Tax Refund

Photo Credit:  Compassion International (Creative Commons)

Photo Credit: Compassion International (Creative Commons)

 

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:

  1. 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.
  2. Give:  Review the last 30 days.  Who came into your life with a need?
  3. 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.

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?