Financial Tip of the Day
For the past couple of weeks, the flurry of W2s and tax documents began arriving in our emails and mailboxes – and will continue to for the next few weeks. Tax filing time is upon us! And while my tax situation varies from year-to-year, many of us have typically come to expect a refund based on our tax situation. If you typically receive a refund and have no savings built up, now is the ideal time to change that. In my blog post How to Save $400 For An Emergency Here & Now, I discussed the Federal Reserve’s report stating that many people couldn’t come up with $400 for an emergency if needed.
If this hits home for you, resolve this year to save half (or at least $400) of your tax refund this year – no matter what. Even if you have debt! Why? Waiting to pay off debt before you begin saving leaves you financially vulnerable. If it takes years to pay off your debt, you’re left with no safety net that entire time. Think of it as starting to save for your dream. Or to give yourself peace of mind before the next emergency. And you’ll still get to spend the rest of your refund as planned (on new clothes, a new phone, etc.)
So, this year when you gather up all your tax forms, make sure to include your savings account information. Have it ready when you file your taxes. And once you see your refund amount, set up half (or at least $400) for automatic deposit into your savings account. Remove the temptation factor. Isn’t that best, anyway? The less we touch it, the more likely the money will end up where we planned. Right? Set yourself up for saving success this year by using some of your refund to jump start your savings into your next dream/emergency fund.
Now, doesn’t that sound easy?
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