Expecting a Tax Refund?
You’ve likely often played out the scenario in your head. What would you do with extra cash? This daydream often involves huge cash windfalls, like winning the lottery, or receiving a sizeable inheritance from a long-lost relative.
Extra cash injections are not necessarily just fodder for daydreams, and have much more pragmatic root in everyday life. However, your extra bits of cash here and there are likely slightly smaller than a lottery win, but can still serve a purpose in helping to strengthen your budget, reduce your debt load or bulk up savings.
At this time of year, your extra cash may be coming from your tax return. Before the cheque hits your mailbox, or is directly deposited into your account (register for this option, far easier!), plan for what the best use is for the funds.
Of course, the likelihood of what you might do with your tax return will be heavily influenced by the amount that you receive.
Remember though, that when it comes to both saving and paying down debt, every little bit counts- even if you think that the amount might be insignificant in the moment.
What you don’t want to do, is get an unexpected cash windfall- and be overwhelmed by the possibilities- and then blow it. Avoid this by planning ahead.
Sit Down with your Budget
Given that we’ve just changed seasons, and that you might be expecting some extra money, now is a good time to revisit your budget. This time, examine your budget with the goal of trying to determine where you might need some extra help.
Savings sagging? Unexpected emergency expenses cause your credit use to increase? Decide which budget area is in the most need, and allocate the funds in that direction.
Maybe your tax return is a smaller amount. Maybe you’ve been really, really stringent when it comes to spending on “extras”.
Everyone needs a reward at some point- and don’t be fooled. Keeping up with a budget with an eye to reaching your financial goals, is long, hard work- that is often stretched out over a long period of time. Even the most committed get weary!
If you are going to indulge- say in a nice meal out, or a family outing- or even a mini-family vacation, plan it- and enjoy it.
This isn’t money that you were counting on, so it shouldn’t impact your bottom line, as long as you remain committed to the rest of your spending allocations.
As a rule, choose something that you will have something to show for afterwards- even if it is in the form of a memory.
Expenses Coming Up?
Summer is not far away, and is notorious with its extra sneaky expenses. A summer holiday, of course is one that can be a major cost centre- but you may already be anticipating that.
What about other expenses, like summer camps or summer sports for the kids, which will require full payment pretty soon? What about extra child care for the kids in the summer, if you and your spouse are not able to juggle work schedules or find family and friends to pick up the slack in the meantime?
Having a little extra cash in advance of that time of year too can be very helpful if you think ahead about where it would be most useful to direct it.