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Welcome back to tax season, people.
A few weeks back, I got a question from a reader who had just started trying to manage her finances: she wrote, “Since you plan for your budget with your monthly income, what do you spend the extra money from your tax refund on?”
It’s a great question, because, admittedly, I hadn’t even thought about it until January when I started getting my W-2s in the mail. I didn’t factor my refund into my debt repayment plan, because I had no clue how much it would be with my new job, and, frankly, I think I mostly forgot about it.
I will say that I try not to view my tax refund as “extra” money, because it is money that I earned. Still, it’s hard to fix that feeling when you receive a lump sum of money on top of your normally scheduled paychecks. Especially because I budget monthly, planned to receive my tax refund in March, and am already getting three paychecks that month. But to answer the question, I will be mostly using my tax refund to accelerate my non-debt money goals, and spend a little on those “extra” things. Here are the specifics:
My total refund is $1,995.
$850 is going towards my Emergency Fund
$800 is going towards my Summer Payment Fund
$150 of is being used to pay my brother for labor he’s done on my car
$115 is going towards my Travel Fund (specifically for my Iceland Trip coming up in July)
With the $80 left over, I’m putting $20 extra into my grocery fund, $20 extra into my going out fund, $40 extra into my pocket money. If I don’t use all of this, I will add the rollover to my Emergency Fund in April.
I think if I were going to be in debt past the month where I received my tax refund, I would probably put most or all of it towards debt. But, since I’ll already be debt free by the end of March, I decided to get a jump start on my other financial goals that I’ve been itching to start. And I like to treat myself, too 🙂