Tax season is here again! You may be tempted to spend your REFUND on things you do not need, like wide-screen TV’s, expensive sneakers and clothes or other non-necessities. Making wise decisions to strategically plan how you will spend your tax refund now will save you from future financial headaches.
These steps taken before the tax season arrives, will be the beginning of smart financial practices that will help you during tax time and throughout the year. Be strategic. Create a monthly spending plan and write down how you’ll spend your tax refund in the coming year.
Begin with Direct Deposit. It’s easy, secure, convenient and fast. In the Refund section (Form 8888) of your 1040 income-tax return, write in your bank’s routing number, your checking or savings account number and your refund will be automatically sent to up to three different accounts indicated in Form 8888. You can also purchase US Series I Savings Bonds on Form 8888. Choosing this option will ensure no
lost, stolen or undeliverable paper checks!
I recommend using the 30-30-40 plan to pay for your past, present and future.
You may also want to consider charitable contributions to a food pantry or a homeless shelter. You’ll be helping your community and giving yourself a tax write-off when you file your taxes next year. Other ways to make the most of your tax refund: Save for the purchase of a major appliance, start a holiday fund, your child’s braces, summer camp, your anniversary etc.
Denise Garrett is a financial counselor at the LDCENY and has more than 25 years experience in financial counseling and retail banking.