I am one of the many people who use the stupid savings system called government tax withholding. Every year I get a nice big fat refund, and every year my tax preparer explains how I could be enjoying that money all year long and earning interest on it.
So this year, after finding out what a nice big refund we are getting, my husband actually contacted the accounting dept to change the withholdings so we can use our money when we earn it.
What I'm wondering is, how can I keep us from just frittering that away. It's nice to get a big refund, those of you who've done it know how that works. You get a large chunk and you can do something meaningful with it. Would I really save that money and set it aside? Or would it just turn into fast food and gasoline, and the occasional pair of shoes for my rapidly growing boys?
What is your take on that?
8 comments:
Let's say you usually got $3600 back from your tax refund. So now, take $300 every month or ~$75 from each paycheck and have it automatically deposited into a savings account. You'll probably never miss it and in less than a few months, you'll have $1000 saved up! If you don't trust yourself to not spend it, you can have it automatically deducted and put into savings bonds or even an IRA, where you literally can't touch it for a very long time!
What Steve said. Steve, would you help me organize my finances?
One of the things I love about online banking is the ease at which you can do this. You can add a savings account, title it anything you want "Tax Refund" or "New Computer" or "Disneyland" whatever, and set up an automatic deposit from your checking account.
The other thing that is nice is that I can go on at anytime, and if I'm in a pinch, I can transfer money back into my checking account as needed. But otherwise, it is being socked away.
You probably already knew that, but it is so easy! It makes me wonder why I don't do it more often. ;-)
Steve=Smart.
I think I will set up an account today to have that extra money funneled into and see how that works. Because really, we can seriously use it. Actually I will funnel half into a savings and half into our everyday account on account of an everyday shortage.
Thanks for the good tips. With our refund this year, we are paying off the car. Yup, it was that big.
I'm all for saving money out of every paycheck and transferring it to a savings account. In fact, I have a set goal each month of how much I want to put in savings. At the same time, I'm a big fan of my tax refund check. I know I could technically have been earning interest on that money throughout the year, but I still like the thought of "free money". Plus, then I let myself spend that "extra" money on something I've really been wanting, and I don't feel guilty about it. Last year I put a waterfall in my backyard. This year I got blinds!
Better than the savings account, I like Steve's idea of a savings bond or IRA. Or a 521 account which is a tax-deductible savings account for kids' college, they can access it when they are ready to pay college tuition.
Good Jorb KK! Way to be smart about money.
If this inflation continues, then the $ you earn now are worth more than they will be on a 1010 tas refund.
All good ideas above.
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