Savvy Ways to Spend Leftover Tax Budget
If there’s such a thing as a leftover budget, then by all means, let’s be smart about spending it! If you’re in any kind of debt and expecting a generous tax refund, this is the time to start paying it off. While it’s tempting to use this money to do ‘fun’ things, you need to seriously consider the long-term consequences of how you choose to spend your refund.
Considering Your Spending Options
Sure, you can certainly spend your tax money on a well-earned vacation, or that flat screen television you’ve been coveting. But the reality of doing this is understanding that once that vacation ends, all of your debts and financial responsibilities will be waiting for you when you get back or turn off that TV. And while you’re looking at that brand new LCD television, all of those creditors you owe will also be looking at you to pay what you owe.
There’s no better opportunity to take care of your financial matters than with your annual tax refund. There are still ways that you can reduce your debt and treat yourself at the same time. The best way to do this is to create a budget.
How to Create a Tax Refund Budget
Creating a tax refund budget isn’t difficult. It’s simply a matter of making a list of all that you owe—no matter how long or short the list may be, it’s better to have an organized layout of your financial situation so that you can: 1) Get a better understanding of your finances 2) Manage them better.
Here’s a quick list of reasons you might want to create a budget for your tax refund:
- Pay off existing tax debt
- Pay off credit card balances
- Catch up on any back bills
How to Start a Tax Refund Budget
First, grab a notebook and a pencil—you’ll need a pencil whenever you’re accounting for money, and write down all of the businesses and vendors you owe. Right next to their names, write down the total dollar amount you owe. Next to that, write down the original due date as well as the current due date. The original due date is required because most likely the current due dates are all overdue. So this way, you’ll have a better idea of which accounts are more pressing and require the utmost attention among those that… require the utmost attention!
Now that you have detailed documentation of your official debt balance, refer to your annual refund to determine the full amount to expect. Take that dollar amount and disperse it among your list of creditors according to the date, not the dollar amount—unless that dollar amount is low enough to pay off completely.
Should you be fortunate enough to have some money leftover, reward yourself by putting it towards a vacation or new appliance fund—maybe even that LCD television. If you really want to be savvy, put that leftover money aside for tax payments in case you owe the following year.