Feature Articles: Taxes
Getting a Tax Refund? Make it Work for You
Brenda Procter, M.S., State Specialist & Instructor, Personal Financial Planning, University of Missouri Extension
For many families, the arrival of a sizeable tax refund
check is the financial event of the year. It is reason
to celebrate!
By carefully planning ahead, you can make that refund
check take you a little closer to your important goals.
In fact, the tax refund check might be the best excuse
all year for you and your family to talk about your
dreams and goals and take a long, hard look at your
financial situation.
It’s easy to get started. Sit down together and talk
about what each family member would want to have or do
if money were no object. Let each person have fun
dreaming aloud about possibilities. Have someone keep
track of all the ideas and make a list.
Go through the list together and talk about what is
most important to the family. It is ultimately up to the
adult(s) in the family to set the priorities, based on
what a family can truly afford. But getting buy-in from
the whole family on a financial plan can pay off for
everyone.
Don’t be afraid to explain the family’s current
financial situation in as much detail as younger members
can understand. List specific bills that have to be paid
no matter what, and include things the family still
might need for longer-term security – like life
insurance or retirement savings.
Even young family members can understand that there
are limits to what the family can afford. If you need to
use the tax refund to catch up on bills or pay off a
high-interest loan, tell them why. In the long run,
saving interest and avoiding late fees increases your
buying power.
Talk about how much money comes in and how much is
left after covering the basics. If the family will play
along, you can have everyone who’s old enough carry
around a small booklet for a couple of weeks to record
what they spend money on and how much.
After the two weeks, review your spending as a family
and bring out your list of priorities again. Think about
ways you might adjust your spending or other behavior to
save more money for what you want, and – this is the fun
part – decide how your tax refund check can give you a
boost to be able to have what you really want or need.
The planning process can continue all year long.
Financial situations and family needs and wants change.
Create a safe environment for the family to manage the
plan together. You might need to work on both income and
outgo, but it will be more fun if you schedule regular
meetings and do it together.
When next tax season rolls around, the family might be surprised by just how far you’ve come. And there may be another big refund check to take you even further.
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Last update: Friday, March 28, 2008
