Another tax season is here and many people are excited to get a refund, some of us not so excited because there’s a tax bill that will become due when you file your tax refund. As a business woman who operates a tax preparation business I must say that tax time can be fulfilling and fearful. My team and I are always happy to help our clients maximize their tax refunds and claim all the necessary tax deductions and credits available to them. One of the most obvious things I have seen when tax time comes around is the lack of planning with clients who receives a refund. There’s no plan, or should I say lack of good financial planning.
Money in every sense requires a purpose. If there's no money control then your emotions will consume you and your refund or money will be done in a blink of an eye. The only way to change your financial situation is to change your money mindset and habits. How do you change; By changing the way how you think, react and respond to external factors such as your money triggers. I don’t want to always seem as if I am prying into my clients business but as a financial freedom coach I want to see them win financially so I often ask personal questions to help them create better financial plans and find ways to spend or invest their refunds.
Here are 5 Money Moves I help them put together with their tax refund each year; 1. Start an emergency fund. It’s reported that over 78% of American cannot cover a $1000 expense if it ever arises without borrowing from a bank, friend or family member. How much should you start with? Start with at least $500-1000 and keep adding to it from your regular salary. The goal is to have some thing if a rainy day or unexpected event happens 2. Pay down or Pay off credit card debts or high interest loans. It makes no sense to have money in savings if you are paying it back in high interest over the life time of a loan. You save yourself money, resources and stress by eliminating consumer debt. 3. Invest in your children college fund. If you don’t have one start now. You can check out investments that are less risk tolerant. Check your state for 529 plans or check out Acorns investment app which is good to invest for yourself and your children, consult a financial advisor who can also help with financial advise. 4. Save part of your tax refund for a down payment and closing cost on a home or investment property. It makes no sense you try to get grants in this housing market as it is a highly competitive sellers market. Having cash ready to pay down and get into a contract and closing on your new home is key. Also take into consideration that you will need money for new furniture, appliances, fixtures and household materials. 5. Lastly but most importantly; invest in a business. A business that is viable, has a purpose and can 10X your money in a short period of time. Do not invest into anything that you are not familiar with. You will lose your money and go back into financial ruin. Stay upbeat and do your due diligence before you invest into anything. If your plan is to take a nice vacation because you haven’t done so in awhile by all means go ahead and do it. The goal is freedom not the broke mentality . Make it your duty to have your money work for you not against you. I always advise my clients about the importance of money management. Money needs a purpose, if you don’t give it one it will find itself some where else. You may have other plans, maybe you didn’t think of doing anything special but I do hope that you find this information useful and can utilize some nugget from this blog post.
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