6 Tips To Make The Best Use Of Your Income Tax Refund

This post may contain some affiliate links.  See my full disclosure here.HOW TO USE YOUR INCOME TAX REFUND

This is income tax season and many of you may be waiting for your income tax refund cheque. (If you owe the government money, stay tuned, I’ll bring it up in a post soon).

Money does not grow on trees – well paper does – but you can make your money grow when you use these tips.

It’s so tempting to think of the income tax refund as play money.  The tighter the budget, the greater the temptation, but I beg you to look at ways you can make that money work for you.

You’ve all heard how it’s not how much you make but how much you save and it’s absolutely true.  Spending more or as much as you make will leave you penniless and possibly homeless.

We women outlive men.  We women usually earn less than 75% of what a man earns.  The chances you will find yourself widowed or divorced are greater than the chances you will win at the lottery.  Women make up a large percentage of the poor after age 60.  Being poor in retirement sucks.

Before you decide where you will allocate your income tax refund, look at your financial picture.  What you owe, what you own, your savings, your investments, your age, your prospect for higher income, or not in the future, etc

This is important because of at least one reason.  If you don’t  expect your retirement income to be very significant, you should probably invest in a non registered retirement plan (Roth IRA (Us) TFSA (Canada) so as not to cut yourself from government supplement at retirement.  Do consult an advisor and inform yourself as to what is best for you.  Knowledge is power.

The first tips is to pay down your debts, but do keep some money to fill up your emergency fund too if you either have no emergency fund to speak of (like if you only have a few dollars saved).  In other words, don’t put all to reducing your debt because that will leave you at the mercy of credit should an emergency happen and it would just add to more debt.

income tax refund: make the best use of your tax refund, income tax return

  • Pay your debts. Pay your credit card balance, your student loans or what you owe to your parents.   Start by paying the debt with the highest interest rate because that’s the one that steals the most money from you.  See paragraph above about saving some too, even if you have debts to pay.
  • Fill up your emergency fund.  First get it to $1,000, and eventually to having 6 months living expenses.  Imagine how free you will feel if you lose your job, or have medical emergencies.
  • Start a saving account or add to the one you already have.  Emergency fund is for emergencies.  Savings is for: a planned trip, a wedding, buying a house, a big celebration, changing your car, home improvements, etc.
  • Start investing for your retirement, add to your retirement fund.  The younger you start, the better for you as you will reap the rewards of compound interest.   Match your employer’s share and invest in a IRA or TFSA. When you can no longer make money you will thank your younger self for having had the forethought of taking care of you.
  • Invest in your education.  Whether in a course to help you get ahead in your work, or classes to prepare for another career.  I invested heavily in my education as a adult and it has allowed me to change career and find work I loved.  It has also allowed me to retire early and have a home business as a psychotherapist and life coach, and finally it is allowing me to continue working with this blog.  I am a big advocate of finding work you love so whether or not you make big money, you are excited to get up each morning.
  • Start the side business you’ve dreamt of for so long.  Retirement can be for 20, 25 years.  If you have the energy and you don’t do much, you will be bored to death!!! A side business can keep you mentally and physically active well into your golden years.

Then, keep a little to:

  • Treat yourself to something you’ve wanted for a long time.  Put a limit on it, like 5% of the income tax refund is for fun, 10% max(that’s if you have a very small refund).  My refund this year is $8.34 so I’ll spend it all.
  • Treat someone you love to a a small gift, a meal.  Limit: 5% or 10% max
  • Congratulate yourself for having done what’s best for you.

Is your income tax refund money free money?  In a way, yes as it can get you to financial “free-dom” much sooner than expected.

I hope I have convinced you to take action now to improve your financial wellbeing.  If so, please let me know, and do share this post on social media to help me reach more women.

Add even more to your nest egg by earning money while shopping

Related posts: http://www.makesenseoflife.com/emergency-fund/

Getting rid of debt

 

 

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Rock your Retirement

couple at the beach

We usually hear about retirement planning from the Financial industry. In fact we normally only hear about retirement from the Financial industry.

When we do hear about preparing for retirement, it is all about urging us to save and top our retirement savings fund, and that’s great.  However, great but not enough.  There is very little education around the other aspects of retirement except maybe if you have an employer who offers seminars around the non-money side of retirement.  Most of us end up in retirement not really prepared to know how to make the best of the 45- 50 or so extra hours every week.  Unfortunately many end up bored, isolated and even depressed at a time where life could be so much fun.

Here are some of the best steps I took to prepare for retirement.

A private retirement savings fund

You need a retirement savings fund. I wish I had taken that step way earlier, but when I divorced in my mid-thirties, I remembered my mother’s advice to save money and her working until she was past 70  I no longer had a husband to depend on financially in retirement and I quickly started a retirement fund which is so treasured today.  I also wish I had put more money in it but I now have enough to not worry about money.  I don’t (can’t) live an extravagant lifestyle but I am quite comfortable.

Fund an “Education Fund”for yourself

Continue reading “Rock your Retirement”

Avoid big money mistakes

Money mistakes, by Marguerite Tennier, M.A                                           This post may contain affiliate links

Avoid those big money mistakes

big money mistakes,

 

 

Money.  Money..  Money. I like to think that I have always been careful with my money.  Yet, when I do a quick review in my mind – as I am doing now – I can see where in my life where I could have been a lot better in the money department.  I made huge money mistakes that ended up costing me a lot of money.

Mistake no. 1

The first money mistake I remember doing was to neglect investing the cash value of a life insurance my parents had taken for me at birth.  I don’t remember how much it was, maybe $1,000.  Not much by today’s standard but $1,000 invested at 7% when I was 20 could have grown to close to $15,000 at 60.  At 10%, over 40 years, that would have grown to over $45,000. – yes forty-five thousand dollars.

Pearl of Wisdom

Obvious – if you have some money falling from the sky, whether it’s the cash value of a life insurance policy or a gift from a generous relative, and you don’t absolutely need it to survive, invest 90% of it – and treat yourself with the other 10%.  If we are talking about huge amounts of money, invest it all now.  Consult with an independent financial adviser (fee for service) first.  And yes by all means treat yourself but remember that even a million dollars does not go very far these days.

Mistake no. 2

Continue reading “Avoid big money mistakes”

I just threw a big $5.00 in the trash – Don’t Follow My Example

Do you want to stop throwing your money away?  I hate when I realize I have done it.   I am not happy about it.  Yes, I just threw $5 in the garbage by not being mindful and forgetting to bring 2 books back to the library on time. I was 6 days late.

This post may contain affiliate links

stop throwing your money away, wasting money, saving, debt free

 

In my defense, it does not happen often that I pay a fine (or interest) but when it happens, it is absolutely like throwing money away.  I must admit that there is another way that I sometimes, too often, throw money away.
It’s when I forget that juice in the back of the fridge, or the cucumber, or… you get it.  Throwing money away when food goes bad in the fridge.   Which is completely crazy.  On one hand, I look at flyers and compare prices.  I stock up on non-perishables when there is a good deal – often Continue reading “I just threw a big $5.00 in the trash – Don’t Follow My Example”