Use Your Tax Refund to Help Reach your Financial Goals
Sara Gilbert/The Coloradoan (Fort Collins, CO)
1 March 2014
It’s tax season and many in our region are due for a refund.
For those who qualify for earned income and child care tax credits, that refund could be significant. Volunteer Income Tax Assistance, or VITA, sites are now open around Larimer County and employ tax preparers who will help you get the most out of your return while saving you hundreds of dollars in tax preparation fees.
Once you get your refund, you’ll want to make good decisions with the money so you can reduce financial stress brought on by living paycheck to paycheck. Taking a vacation or buying the newest technology might be a tempting use of your refund, but look at your long-term goals.
If you’re renting a home in Northern Colorado, you know how costly that has become. Saving some or all of your refund to put toward a future down payment on a home might be a good idea. Home ownership does not have to be out of reach if you are able to save money and pay your bills on time.
Or, if you have debt that’s keeping your credit score lower than it needs to be, you might want to consider paying off some debt so your credit rating can begin to improve. This, too, will open some doors in the future.
Would it make sense to invest in some classes to improve your work skills and put you in line for a promotion or better-paying job? Do you have a car loan that needs to be paid off?
If you’re able to pay off a debt, put the money that was going to the monthly payment in your savings account. Better yet, automate the transfer so you don’t even have to think about it.
Do you have an emergency fund? More than half of us don’t, but getting on top of this will make you better prepared for a car repair or other unexpected cost that is bound to come along.
Tax season is a great time to discuss family financial goals with your significant other and older children. Your tax refund might just be the boost you need to stabilize your finances, so take that opportunity.
A colleague of mine had a good plan for her tax refund every year. She saved a third, spent a third on a family goal and was more frivolous with the final third. Whatever you do, be conscious of your goals and use your refund to make your life a little more secure.
For more information about VITA, call 211 or United Way of Larimer County at (970) 407-7066.
Sara Gilbert is the Colorado group manager for the local GreenPath (formerly Consumer Credit Counseling Service), 3500 John F. Kennedy Pkwy., No. 210, Fort Collins. Reach her at (970) 229-0695 or firstname.lastname@example.org.