Did you make today's tax deadline at midnight, or did you file an extension?
If you have to pay taxes this year, were you able to shift your thinking around your taxes, as I suggested in my last post?
Now, what to do if you got a refund or you're expecting one...
First of all, you may not have as big of a refund this year because of the tax laws that were passed in 2017.
According to the latest data from the IRS, the average refund for early filers is 8.8% smaller than last year, down from $2,035 to $1,865.
You should've seen a little bit more in your paycheck throughout the year, and that's why there shouldn't be as much coming back to you. Also, as I mentioned in my last post, it's best not to have too much of a refund anyway. It's your money. You should be the one to earn interest on that money, not give it to the government to make money from your money. (They're keeping that money for you, in a bank, most likely earning interest.)
So, what if you did get a pretty good refund? Let's say it's the average of $1865. What do you do with it? Go on vacation? Pay off debts? Put it into savings?
If I were to look at your overall financial plan, I can give you a more specific answer. Let's say you had $600 of credit card debt left. I'm going to tell you to pay that first:
$1865
- 600
$1265
Then, I'm going to suggest let's BALANCE it between savings, giving, and a little splurging. How are you doing on your Emergency Savings? Do you have 3-12 months of expenses saved up (depending on how stable your job is, how much risk you're comfortable taking on, etc.)? If not, then I would suggest putting another $600 into your emergency savings account.
$1265
- 600
$665
Then, I would give the remaining half to your church, favorite charity, or wherever you get your spiritual food.
$665
-332
$333
Finally, you have $333 to spend however you'd like! Make it count. I would suggest experiences rather than things, since studies show that experiences make us happier! It could also be spent on learning something new, putting the down payment on a coach, trainer or program you know will help your business or make a difference in your future, or self care, like a day of massages, facials, and a hair appointment!
If you're able to balance between paying off debts, saving, giving and spending, then you'll ultimately be more satisfied with how you spent the money. Of course, every scenario is different! If you'd like me to give you a personal assessment of how best to spend your tax refund, please sign up here or send me an e-mail at hello@katychenmazzara.com.
If you're comfortable in putting your info in the comments, I'll give you an assessment right here in the blog. It could help others, as well. So, thanks for sharing!
With Gratitude,
