Tax Returns

The tax season is upon us. As a one income family, we actually look forward to take season every year. We enjoy the benefits of a refund. I know some of you are groaning, but I will put out another post that will help you identify ways to become part of the lucky refund group. This post is really for all of us who sit around thinking of all the ways we get to spend our free money. This is probably the closest we get to winning the lottery, especially considering we rarely gamble!
Instead of rushing out to spend the money on all the little projects and desires that might cross your mind, consider allocating your money in the following way.

First, as a Christian family my husband and I always give 10% of our refund back to the church. Actually, we like to give it specifically to a family of missionaries that I grew up with. We find this is a great way to give to charities that do not fit into our monthly budget.
Second, if you have debt of any kind, refunds are a great way to decrease or eliminate debt. Paying down a car loan, credit card, or student loan is one of the best ways to utilize the extra cash. If you do not have a car loan, consider putting part of the money in savings every year to use as a considerable down payment on a car in the future. (Wouldn't it be so nice to save the money for a car before actually buying it! It is a foreign concept to most of us, but there are plenty of people out there that pay cash for cars!) Also, putting part of your refund into your retirement accounts is a really great idea. Especially for those of us on one income. This allows you to contribute yearly to retirement without even working! Another great idea is putting this "responsible" portion of money into your child's college savings account. However, I know that after looking forward to this extra stipend for a year it may be difficult to spend all your money on getting rid of debt and investing in the future. It is an extremely boring responsible thing to do!
So, third, I advise you take your remaining 90% after charity and allocate 25% of that money to use for fun. You will feel like such a mature adult for paying down your debt, and you can still have a little something for yourself. So to sum up:
10% to charity
65% to paying down debt or investing
25% for fun

I wish you all a happy tax season and abundant refunds! As always, I would love to prepare a budget for you. Please contact me at jessicabaer@cox.net if you are interested!