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

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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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Emergency fund: what you need, whether you are 20 or 80

Why You Need An Emergency Fund

 

emergency fund, savings, borrowing, student debt,

An emergency fund is freedom.  Money is freedom.   Money on hand gives you choices.  Having a job that pays well is great but financial freedom is more about the money you keep than the money you earn.  Some people become financially independent on a modest salary while some are always broke on a much bigger income.

Financial freedom means to never have to borrow money for emergencies, like the roof leaking, or the fridge breaking down or to go on holidays or for birthday or Christmas gifts.  Financial freedom means to know you Continue reading “Emergency fund: what you need, whether you are 20 or 80”

Be debtfree in January

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There are 16 weeks left to mid-December and the full swing of Christmas shopping.  Ahhhh! I hear you say.  Last year’s painful wake up from Christmas expenses still fresh in your mind, as you remember the huge credit card bills you got during the first weeks of January.  How great would it be to be debtfree of Christmas expenses on January 1st?

This Christmas, you don’t have to recreate the past.  You can change what you do and how you do it so that you wake up to a zero balance on your January credit card statement.  Follow these 3 steps to skip the January bills.

Evaluate your budget

How much can you spend on Christmas gifts?  Not what others expect you to spend  Not what you feel you should spend or what you spent last year. What is a reasonable amount you feel comfortable giving away? One way is to decide the amount you could comfortably pay on your credit card statement of January.  If your bill was $700. you could easily pay it off befoe the due date.  If however you feel you would need 2 months to pay it off, then  $350 is most likely the maximum you should spend on Christmas gifts.  If it would take you 3 months to pay $700. then $235 should be your top budget for Christmas.

make a list

Start with your most inner circle and continue to other people: spouse, children, parents, siblings, friends, co-workers, mailman, hairdresser, etc. The farther down the list, the less of a priority to buy a gift.  The smaller your budget, the shorter your list or the smaller each one needs to be.

put money aside now

As of today, there are 16 weeks left to mid-December.  How painless would it be to look at your non-essential expenses and put them under the knife.  Instead of buying coffee at $2 or $3., bring some from home.  Instead of buying lunch at $7 to $10. bring a lunch.  Cut dinner out once a week and you have an extra $30+.  Or simply take $10., $15 or $20. from the amount you give yourself every week, and put that in a special saving account for your Christmas shopping.  You could end up with $160, $240 or $320. to pay cash for your gifts.

On top of the gifts, there are also other expenses related to the Holidays. More entertaining, hostess gifts, a new outfit for yourself or the kids, traveling to see family.  Try to get an idea of what those extras will cost.

In the end, taking care of your finances is taking care of yourself and of your peace of mind.  Nobody ever regretted having more of that.

If you travel during the holidays you may want to look at AirBnB  I am using the for the first time on the September 10 weekend to Quebec city and for 3 people we get to pay less than a hotel room for a full apartment, and parking.

Take a look at my Resources page and other posts for ideas to save money

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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”

Save on your Grocery Bill With These 5 Tips

beef
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I like saving money on what I buy.  So much that I have made mistakes in the past by stocking up on perishables and had to throw food away.  However, there are ways to really save money on food.  These next 5 tips are some of the ways I do.  Mark Cuban, billionnaire of the Shark Tank has been known to advise to stock on non perishables, even saying “use that space under the bed for the storage of your non perishables”.  If he, with his wealth can say that, I totally want to do it.  Might not make me a billionnaire but “a penny saved is a penny earned”.

Here are some food items I never buy at full price: chicken breast, or legs, or thighs, butter, peanut butter, ice cream, whipping cream, olive oil, toothpaste, mouthwash, canned tomatoes, canned salmon, canned tuna, ground beef, steak, pickles, mayonnaise, ketchup and pasta.  And maybe a few more I just don’t remember right now.

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1. Know your prices and check the flyers

To save money, you need to know what the regular price was (is) at the same store and elsewhere.  That means you need to learn the regular price of most items you use regularly.  Without that information you can be misled into thinking you are getting a deal.  Some “discount” stores often advertise big specials.  Some are real, others not so much.  If you really want to lower your grocery bills, you also should become familiar with the usual prices of the specials.  For example, the peanut butter  I buy(brand) is regularly over $5. a kg.  It often comes on special at $4.00 a kg but the real pleasure of stocking up is when I get it at $3. a kg.  Flyers are online a day or two before the day the specials start.  With a list it’s easy to go through my 5-6 stores in about 30 minutes and take note (I used pen and paper) of what is which price where.

2. Often it’s worth driving around to take save money

Well, it depends.  My car does around 12-14 kms a liter.  A liter costs $1. right now.  If I am going to save around $10. or more then spending $2. on gas is worth it to me most of the time.  I recently saved $26. on one grocery trip that cost me $2. worth of gas.  Food tastes better when I get a good deal.  However, I don’t travel if there is a snow storm or if it’s a really busy week.  In those cases,  I’ll wait until next time.   There is always a next time.  Everything always comes back on special within a few weeks. And because I have a well-stocked pantry, I can wait.

3. Buy generic.

At least for some items.  I admit I have strong preferences for the brand of some items, ok, a few items: butter, peanut butter, toothpaste, yogourt, ice cream, tuna and probably a few others I just can’t remember right now.  As I mentioned above, I only those items when they are on special. For me saving money is not about feeling deprived.  If I was financially strapped, then it would be generic all the way.  But I am not and I love food.  Better eat less and well.

4. Shop every two weeks or even once every month

I have not yet mastered the shopping once a month – except I have so much non-perishables in my pantry that for those items I can shop once every 3 months or so – but for perishables, I have recently put myself on a schedule of shopping once every two weeks – for fruits, vegetables, ice cream, milk and meat or fish.  I have found that I spent much less than I normally do since I no longer stop by the store for one item and, you may relate, leave with a full shopping bag.  The less often you enter the grocery store, the more money you save.

5. Be adventurous

Try recipes that call for less known but cheaper ingredients.  A vegeterian chili can feed a crowd and has as much flavor as the one with meat.  The same goes for spaghetti sauce.  If you want the meat flavor, adding half pound of ground meat, or less, to either does the trick, and you can also add chick peas (ground) to the spaghetti sauce.  It thickens it and adds needed proteins.

Pearls of Wisdom

Make a budget and do your best to stick to it.  Use leftover vegetables at the end of the week to make soup.  Put leftovers in clear containers – it makes it a lot easier to remember what’s in the fridge.  Same for leftover meat.  If you think you may not have time to make that soup, freeze it all until the weekend when you have more time.  Look at the “reduced” items at the grocery store.  I have gotten perfectly good green beans and cherry tomatoes at 75% off.

If you have other tips, please let me know.  I love saving money at the grocery store and eat healthy.

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