"Waste neither time nor money, but make the best use of both. Without industry and frugality, nothing will do, and with them everything." Benjamin Franklin.
In the U.S. many people manage their taxes in a way that results in an annual tax refund, instead of a tax bill. There is a tax refund because the person has allowed more taxes to be taken out of each paycheck than required. When tax forms are filed for the previous year, the taxpayer receives a refund check. It is well known that the financial gurus frown on this practice, because you could have been earning interest on that money, rather than let the government use your money for free. Between you and me, the interest is basically minuscule.
Those who receive tax refunds know that there are lots of opportunities for how that money can be used. Many have learned through experience that if you do not develop a plan for that refund money, it will be like water leaking out of a bucket. Little by little it will be spent, and in the end you will be asking, “Where did all that money go?”
So the challenge for you is to develop a plan for the money before you start spending it. Is the goal just to spend the money on the countless number of things that are needed or wanted? No! The goal is to use the money in a way that not only provides a short term benefit, but also will enhance the life of you and your family in the future weeks, months, and years. When money is managed in this way you can continue to reap the benefits of that tax refund, even though it is no longer sitting in the bank. And we can all use some good news when it comes to our finances.
Published in: Personal Finance