Tax Refunds….Pay Bills or Play?

by Kathy Sykes on January 23, 2013 · 0 comments

In 2013, I am going to be focusing a lot on how to make smart financial decision that will benefit your family’s future, as well, allows you to have fun and purchase the things that you need.

Am I a trained financial planner? No. But I do consider myself an excellent manager of money. Ever since I graduated from college, I have been very mindful of how my money was spent and if I was being responsible. I have a story behind how I got to this place but I will leave that for another time (in the near future).

Today we want to answer the question of how to spend our tax refund. This is my approach to the “windfall” that we are hopeful to get each year:

I use the 50/50 rule. Use 50% of it to pay off bills and the other 50% to secure your finances for a short time period. The bills I am speaking of are short-term loans, school bills, credit cards, personal loans. This is the best time to get people “off your back”. Securing your finances means to put money away in a savings account or pay a couple of bills ahead.

If you are fortunate to not have any short-term debts to pay back, I still encourage you to use the 50/50 rule but this time it’s a little different.

Use 50% to buy for yourself/family and 50% to pay tuition, daycare, car notes, bills ahead a few months. There is nothing like the feeling of relief knowing that you are “ahead” in your bill paying.

It is easy to think that tax refunds are extra money that we receive to spend on frivolous things for our own enjoyment. But the only thing that is frivolous is our misuse of money when we haven’t taken care of responsibilities.

Trust me, if you are mindful of your money….you will have plenty to spend for your own pleasure in due time.

 

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