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How to be intentional about your tax refund. (Hint: Don’t spend it all!)

How to be intentional about your tax refund. (Hint: Don’t spend it all!)

The average tax refund will be around $3,000. This is your money, which you worked hard for (and that you loaned the government by overpaying taxes).

It’s spring. The birds are singing and here in Arizona, the lizards have begun basking in the sun.

And … it’s tax season.

I am blessed to have a career I love, a beautiful place to live, and loving family and friends — but I still have to do taxes.

Ugh! I can’t get away from it! But in a way, taxes can be a confirmation of how much financial success you’ve had last year and now you can make adjustments for the year to come.

Some people have already filed their tax returns and I applaud them. I’m guessing they’re probably receiving a tax refund.

Tax refunds, when combined, total more than $200 million.

In fact, about 70% of American taxpayers are getting part of over $200 million the IRS will be paying out in refunds this year.

That’s a lot of money!

The average tax refund will land somewhere around $3,000.

A lot of people get excited about their refund because it seems sort of like winning a prize or receiving a gift.

And $3,000 is a lot of money! The truth is, when you get a tax refund, it’s actually the government giving you back your own money.

You earned it and gave them too much during the year and now they have to give it back. Interest free.

If you’re receiving a tax refund, and especially if you’re receiving a refund of $3,000 or more, T&H Financial Coaching has two suggestions for you:

Tip 1: Make an adjustment on the amount withheld from your paycheck.

You want your tax refund will be closer to zero.

This means instead of waiting for your refund, your paycheck will increase by about $250 more per month!

And it’s easy. Just talk with your HR Department at work. Of course, you’ll need to fill out a new form to update your withholding, but they can guide you through the process.

Tip 2: Take time to enjoy having $3,000. Be intentional what you do with it.

My advice is to always do what’s right for you. It’s your money and you get to decide; but decide with intention.

Remember, it’s not an all or nothing decision! You don’t have to do just one thing with your tax refund. 

We like to recommend that you: 

  • Save some. 
  • Spend some. 
  • Give some.

I love this balanced approach!

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T&H Financial Coaching guides individuals and couples  on how to organize their finances, strengthen their relationships and build wealth. We love seeing our clients reach their goals!