Making the Most of Your Tax Return
Palms get itchy this time of year with folks anticipating their tax refund. All too quickly the refund is here and gone again, spent as quickly as it came. It is important to remember that a tax refund is not “free money,” rather it is the return of earned income. It’s important to develop a plan for your refund. For example, by taking a small amount, perhaps 20%, to use that for a fun purchase or a vacation. But, by saving the remaining 80% of the refund, taxpayers can improve their family’s financial situation. Here are some considerations:
Look at your financial health and consider the year ahead.
What debts are you paying off? Do you have a high interest credit card or loan? Consider making a lump sum payment toward your debt.
What crisis could come along?
Do you have six months worth of living expenses saved for an emergency? What if you were to lose your job? What if you need to repair your car, replace your washing machine, or have a major medical expense? Could you pay for those things without resorting to your credit card? A tax refund is a great way to start an emergency fund that would help handle any of these events.
What big events are planned this year?
Is there a wedding, summer trip or a graduation in the future? Use your tax refund to open a savings account for this purpose. With a lump sum to start you on your way, adding a small monthly amount can make saving for a special occasion a cinch.
Are you saving for your retirement or your child’s education?
This tax refund could make a great impact toward any savings goal and can have a positive effect on your taxes for next year.
For additional information, contact the Wildcat Extension District, Crawford County, 620-724-8233, Labette County, 620-784-5337, Montgomery County, 620-331-2690, Pittsburg Office, Expanded Food and Nutrition Education (EFNEP), 620-232-1930.
Wildcat District Extension Agent
Labette County office
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