Sharing about Money and Our 2018 Tax Refund
If you read to the end my about page you’ll know that one if my interests is personal finance. In the first part of my Small Living Series last month I shared a bit about our rent to income ratio, (I’m not sure if that is an actual term but it seems to work) and that was one of my favorite parts to write and reflect on. I love budgeting, setting financial goals, and learning about personal finance and investing from blogs and podcasts, but I sometimes have a hesitation to write about them here.
I think- who am I to talk about the subject? What do I even know? I certainly don’t have the experience of digging myself out of any financial troubles am I am lucky enough to have parents who set an example of a healthy relationship with money growing up. I could apply that “who am I to…” question to everything I do, and that is in no way helpful to growth, so I am choosing to dismiss that thought. I have so much to learn about the subject and perhaps others could learn along with me. I’m sure there are other curious souls like myself who wonder how people manage their money and have big financial goals that they are chipping away at, so I am pushing aside any uncertainties and writing about money as I feel so inclined.
Today I want to post a few brief thoughts on the exciting subject of tax refunds! How fun is that. I think a lot of people count on a tax refund a sort of bonus that comes each year, an excuse to spend money on something special. A tax refund is not money that the government is giving you, it means you overpaid them and they are just giving it back. Sometimes it may come in handy if you are living end to end, and it may provide quick assistance and cushion for someone in a bind, we like to put it towards our financial goals, and then simply ignore it.
Our current financial goal is saving for a house so the $2789.78 in federal taxes and the $173.00 in state taxes we were refunded went to that. If I had any debt I would definitely, 100%, without a doubt, throw all of it at that. I don't know what other people get back or pay in taxes or what is considered average, but that felt like a good amount, so we adjusted our federal to have a little less come out. In an ideal world everything would even out to $0.
Habits regarding "extra" money (tax refunds, bonuses, gifts, side hustles) have a large impact on financial goals even if the amounts are small. The way we perceive that money is so important! If you think of it as something to be treated differently, you often spend it and find yourself easily justifying a big purchase. If you think of it as normal income, you may be more likely to save it. I am definitely not saying there isn’t a time or place for a splurge or a big purchase or treat, I think that is all a part of budgeting. But that’s exactly it, those things should be carefully budgeted for. This frees you from guilt, keeps you spending smart, and most importantly allows you to stay track for your financial goals.