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Why planning early for tax season can help

For the most savvy savers, the preparation for tax season starts well before they receive a w-2 from their employer in January. This is because they likely know that a stellar income tax refund check is not an invitation to spend wildly for a month or buy something gaudy and expensive. To the contrary, they figure it as an opportunity to invest in getting their financial house in order so that they can withstand uncertainties; both in the financial markets and in life itself.

As such these people likely follow a financial checklist; a lineup of priorities that help them in determining what they should do with a windfall. For those who are expecting an income tax refund next year, we offer a few things to consider in getting your financial house in order (or keeping it in order). 

Attack debt with a vengeance – Not only can outstanding debt cause you stress, it can hamper opportunities to make future purchases, such as a car or a home, or even in starting a new business. Depending on how large your refund is, you may be able to make some important strikes against troublesome debt.

Boost your emergency fund – Having a cash reserve equal to three to nine months worth of expenses is ideal. Using your income tax refund to boost this can help with having peace of mind.

Spend with your budget in mind – As we alluded to earlier, some people may see an income tax refund check as an invitation to go on a spending spree. Instead, reviewing your budget to see where you are wasting money by paying interest on credit cards or unreasonable loans to see where you can make changes can be helpful. 

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Law Offices of Robert T. Leonard, APC

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Toll Free: 888-408-9486
Phone: 818-224-7935
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