5 Ways To Take Control Of Your Money With A Tax Refund -

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According to statistics reported by the IRS, the average 2017 expected Tax Refund was $2,763.00. There are many financial decisions that can be made to help greatly improve your financial circumstances. Especially when receiving an average tax refund of $2,700.

Obviously, not all tax refunds can magically fix all financial woes in a year. Nonetheless, it can make an impact! Are you are like my family and aiming for Financial Freedom? With the aid of receiving a Tax Refund, we can gain more control of our money by making some smart money moves. If you are receiving a tax refund and you are at a loss on how to use the refund. Then keep reading to potentially find ways that could make the best impact on your journey to Financial Freedom.

5 Ways To Take Control Of Your Money With A Tax Refund

Build Your Emergency Fund

You may have heard this time and time again, but this type of advice is so important and necessary. There were so many years of my life that I spent flying by the seat of my pants. Every emergency that we encounter was a major crisis and stressed induced moment. Once we understood the value of an emergency fund and funded a beginner’s emergency fund we seen these major crises greatly reduced to just being inconvenient moments. Certainly, unexpected events still do happen in our life. However, we are better prepared for them by avoiding the use of credit cards or foregoing the payment of a monthly bill to cover the unexpected event.

We followed Dave Ramsey’s Total Money Makeover plan. His plan suggests having $1,000 in an emergency fund savings account. This is money that should not be touched unless you reach a true emergency. It is an emergency if it is unexpected, necessary and urgent. Further recommendations have been made to have 3 to 6 months’ worth of expenses in your emergency fund. However, this phase would be after you are debt-free and already have an emergency fund started. This can help provide some stability and peace of mind when encountering major emergencies. Do you currently have any type of savings to cover emergencies? What type of emergency have you recently had to handle?

Pay Off Debt

There is never a better time than NOW to start paying off debt. If you’re receiving a tax refund this year, putting a portion or all of the refund towards your debt can save you hundreds up to thousands of dollars over time in interest fees. You’re not only potentially saving yourself from unnecessary interest fees, but you are also possibly freeing up additional money each month. This allows us to put our extra money towards things that fulfill our passion and goals like savings, retirement funds, vacation, luxury items, and etc.

We are currently in this phase of our Financial Freedom journey as we are working on paying off our smallest debts one by one. Dave Ramsey’s Total Money Makeover recommends this process which is called the Debt Snowball. There are other approaches to paying off debt out there like the Debt Avalanche. The Debt Avalanche focuses more on paying off your debt with the highest interest first. Find the approach that works best for your debt as tackling debt is the most important component of taking control of your money when in debt! What approach do you currently use to pay off debt? What has been the most difficult part about paying down debt?

Pay Essential Expenses In Advance

Another great way to utilize your Tax Refund and to help you take control of your money would be to pay your essential expenses in advance. A great example of this would be to pay your Auto or Home Insurance policy by the year versus month to month. By paying for your policies in advance there is the potential to increase the amount of money you can put towards your other money goals. This type of money move could also help you save money as well. You ask, HOW? Well, some insurance companies may charge an additional installment fee to pay for your policy on a monthly basis. You can potentially avoid these fees by paying the policy in advance. I would recommend contacting your specific insurance agent to find out more about your specific policies and payment plans.

Keep evaluating additional monthly essential expenses that could be paid in advance for the year. Some of these expenses can take the form of housing costs, streaming subscriptions, and necessary clothing for work or school. The ultimate goal of this financial decision is to save money and gain extra money throughout the year. A sense of peace of mind can occur when you take care of expenses in advance. When an emergency arises throughout the year that could impact your monthly impact this is one less expense to stress about. Do you currently pay any expenses on a yearly basis? What has been your experience?

Invest in additional Income Streams

Sometimes we may focus so much on how to save money or how to decrease our debt that we forget to look at ways to increase our income. One of the biggest keys to taking control of your money is by increasing the amount of money you receive. Increasing the amount of money that you receive can take form in many ways. Some ways to increase money can be selling items that you no longer use, taking on a second job, providing services for compensation, taking online surveys, investing, and etc.

We found that there are many possibilities to help increase your monthly income without negatively impact your family’s needs. Both my spouse and I already spend 40+ hours at our current companies that we work for. This means that we want to spend more time with each other and our daughter in our free time. We were able to find ways to make extra money through simple things that we do every day like shopping or browsing the internet while watching television with the family, Some of these methods by take more time and pay in smaller quantities but over time it adds up and can make a big difference for our Debt Snowball progress.

While researching and investing in additional income streams ensure that your choices are helping to improve your financial goals. Evaluating crucial components such as time commitment, effort and the impact on your life can greatly aid in which income streams to begin using. What are you doing to increase your income streams?

Invest in your personal development

Utilizing your tax refund to invest in your personal development may not improve your money situation instantly. However, taking advantage of ways to develop your mind, body and spirit can increase your earning potential in the future. Personal development can take the form of increasing your knowledge or skills through online courses, books, local workshops and so much more.

Our family is always looking for ways to personally develop whether that is through educational pursuits or leisure activities. Continue to do what is going to be best to help you grow into the person you need to cultivate your money tree. What are some of the ways you have developed yourself personally this year?

Are you ready to start taking control of your Tax Refund?

As you can see, there are multiple ways to start taking control of money especially if you are receiving a tax refund. These tips can also be applied to other larger sums of money received. The key is to utilize the money in the best way that will serve you and/or family well into the future.

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Do you have other methods that help you take the most control of your money and tax refunds? We would love to hear more about your methods or your experience in using any of the 5 mentioned way of taking control of your money with a tax refund!