Are you expecting a tax refund this year? There’s a pretty good chance your answer is yes.
In fact, the IRS issued 40 million tax refunds worth nearly $125 billion in 2015 and the average refund amount is $3,120 – a nice chunk of change. But, before you start daydreaming about all the ways you can spend that money, I encourage you to instead think about all the ways you can improve your finances.
Also, if you’re drowning in debt, have stacks of bills to pay or have big goals for your money, a lump sum refund can help you significantly. To learn more, take a look at some smart ways to spend your tax refund in 2018.
Pay Your Bills
I used to receive a tax refund back when I was in college. I was a single mom at the time and a refund was a great way to help me get ahead with my mounting bills. I usually put the money into a savings account or made extra payments on my rent for the year. This way, my budget wouldn’t be so tight each month.
It turns out that other moms take the same approach. Emma Johnson Reed, a stay at home mom from Ohio, says for the past few years she and her husband have used their tax refund to pay off medical bills and their credit card balances.
“Nothing makes life easier than feeling like you have “extra” money in the bank and all your bills paid for,” Emma says.
Pay Off Debt
If you have debt that you’re eager to get rid of, consider using your tax refund to make a dent in that amount or pay the entire account off.
In 2015, I owed $11,000 on my high-interest car loan and I wanted it gone ASAP. I received a $3,000 tax refund that year and put the entire amount toward my car loan. I ended up paying off the remaining balance on my loan that same year, saving myself thousands of dollars in interest.
Boost Your Savings
Sometimes, saving money for a goal can feel like a long-term plan. But, you can speed up the process with a tax refund.
A tax refund can also help you start automating your savings immediately. For example, you can deposit your refund into your Chime Spending Account and then begin saving money automatically every time you use your debit card.
Chime also has a couple of automatic savings features that help you save money whenever you spend it or get paid. For example, you can automatically transfer 10% of your paycheck to your savings account, or round up your transactions to the nearest dollar. Those round ups are deposited straight to your savings account, helping you reach your money goals faster.
Ashley McDonald, a registered nurse case manager from Michigan, uses her tax refund to replenish her savings account. She once even used the money to fund a down payment for a new car.
“I’ve been saving a portion of my refund money ever since college and it’s added up to $3,000 – $4,000 in just a few years,” says McDonald.
If your emergency savings account is fully funded, you can still save. This way you won’t have to worry about borrowing as much money in the future for everything from your child’s college expenses to buying a home.
Isaac Flex, a teacher from Florida, says he and his wife take a portion of their tax refund and set it aside in college funds for their two daughters.
“I know how expensive higher education can be and I want to help lighten my daughters’ financial burdens as much as possible,” Isaac says.
“Since we receive a child-tax credit, which boosts our tax refund, it’s nice to give that money back to our daughters by beefing up their college savings.”
The sooner you start investing your money, they better off you’ll be down the line when it comes to building long-term wealth.
For example, consider investing your tax refund in your 401(k) or IRA. You can also start making monthly contributions to your individual retirement account and open a brokerage account.
Brandie Rogers, a graphic designer living in North Carolina, says she uses her tax refund to invest in the stock market.
“One of the best things I did with my last tax refund was use $1,000 to open up a brokerage account,” Brandie says. “It was nice to not have to worry about saving up the money to make the initial investment. For years, I kept telling myself I would invest but never did, so when my tax refund came around, I knew I didn’t have an excuse or anything holding me back.”
Aside from investing in the stock market, you can also use your tax refund to invest in yourself. For example, you could invest in your education by getting a new certification or learning an additional skill.
Another perk to investing in your skillset: you’ll be more marketable and able to earn more money throughout your career.
Where Do You Want to Be Next Year?
When you file your taxes and receive your tax refund, you’ll be tempted to spend mindlessly on splurges like a new phone, furniture, a beach vacation, and other non-necessities.
While there’s nothing wrong with doing nice things for yourself, you also should think about your future self and whether you’re on track to meet your goals. Remember: a tax refund can provide you with some relief and help you stay above water – financially speaking.
At the end of the day, how you spend your tax refund depends on your motivation and goals. In my case, I was ecstatic to pay off my high-interest car loan early in 2015 and I no longer have to worry about that debt.
What about you? Are you ready to use your tax refund to improve your financial state?
You may have cheated on your diet too many times this year or paid for a gym membership that you only used twice. Sound familiar?
Indeed, I’ve been there. Two years ago, I was working at a job I didn’t like and my harmful habits were not what I would call mentally, physically, and financially healthy. I sat all day, snacked on junk food and candy, and was too overwhelmed to manage my money properly.
I turned things around and so can you. With 2018 right around the corner, this is the perfect opportunity to make positive changes and improve your health. To get started, check out these 6 easy and affordable tips.
1. Get More Sleep
Getting enough sleep at night is one of the most important things you can do to improve your health and restore your energy each day. Plus, it’s absolutely free!
With this said, 40% of adults state they get less than the recommended amount of sleep each night, according to a Gallup poll. This isn’t good news because you should be getting at least eight hours of sleep each night in order to fully rest and restore.
If you aren’t getting sufficient sleep, make a commitment to go to bed earlier or wake up a little later if possible. This may involve cutting some tasks out of your schedule and having a more productive morning and nightly routine, but it will be well worth it.
2. Drink Enough Water
It’s ideal to drink about two liters (eight 8-ounce glasses) of water per day. Most of us, however, fall short of this goal and may become dehydrated without realizing it.
To increase your water intake, start tracking it daily. You can also infuse your water with fresh fruit if you think it will improve the taste. Last year, I bought a 22-ounce water bottle and it was an easy way to train myself to drink more water on the go. I knew that once I filled up my water bottle for a third time during the day, I was getting closer reaching my daily water intake goal.
3. Find Out Exactly Where Your Money is Going
Financial health can also contribute to your physical and mental health. If you’re stressed about money, it’s a good idea to keep an updated budget and this way you’ll know exactly where your money is going.
For starters, clarify how much you’re earning each month and make a list of all your expenses. See if there’s any money leftover to make extra debt payments. And, make sure you’re not racking up unnecessary bank charges, as this can put a strain on your finances. If this is the case, consider switching banks.
The next steps to getting your finances in order include building up a rainy day fund and automating your savings. Lastly, it’s now time to focus on going after your long-term goals.
4. Reduce Your Sugar Intake
Consuming sugary foods and beverages can be a hard habit to get rid of because sugar can be addicting. Yet, you don’t have to go cold turkey right away.
To start cutting down on sugars, read the labels whenever you buy something. Some code words for sugar include lactose, malt syrup, cane crystals, crystalline, and fructose (i.e. high fructose corn syrup). Once you see these words on the ingredient label, try to swap them out for healthier options. For example, perhaps you can switch to a less-sugary breakfast cereal, or replace your fruity yogurt with plain Greek yogurt and then add fresh fruit on your own.
Passing on sugary foods and better yet – cooking at home – will also help you save money and perhaps even make more money.
5. Make Time to Exercise
When your schedule gets busy, exercise is one of the first things to go. But, you can make changes to fit exercise into your life.
First, you need to make a real commitment based on your own needs and goals. For example, while you may not be able to do a hardcore gym session daily, you can try working out at least three days a week to start.
You also don’t need a gym membership if it’s not in your budget. You can go for walks or run around the neighborhood, rent exercise DVDs from the library, watch videos online, or download an app. To find time to exercise, I’d recommend bumping it up in your schedule so you can get it out of the way early in the morning before work. You can also find a friend who wants to exercise with you.
6. Prioritize Self Care
If you’re overwhelmed, worn out, and just plain exhausted, make it a point to prioritize self-care. Self-care involves making your health and well-being a priority by listening to and attending to what your body needs long-term.
To start practicing self-care, I recommend creating a list of things that energize and inspire you, as well as things that deplete you. This way you’ll know exactly what brings you joy and motivation, and what drains your energy and happiness. Use this list as a guide to make long-lasting lifestyle changes.
Commit to YOU
As you can see, there are plenty of ways to improve your health without spending tons of money. It all starts with your commitment to a better lifestyle that will reward you physically, mentally, and financially.
Are you ready to become healthier in 2018?
If your car breaks down or you lose your job tomorrow, do you have anything to fall back on? What if you get sick and can’t work for an extended period of time?
No one wants to think about these unfortunate events, but emergencies happen and this can mean unexpected expenses. If you’re tired of living paycheck to paycheck and ready to become more financially stable, you should build a solid emergency fund.
An emergency fund acts as your first line of defense when you’re faced with unplanned and urgent expenses. Financial experts recommend saving anywhere from three to six months worth of expenses, which can be difficult and take some time. If you’re currently in debt, financial guru Dave Ramsey recommends saving at least $1,000. With that said, more than a quarter of all Americans have no emergency fund and more than half don’t have enough money saved up to cover a $500 expense.
Want to make sure you’re able to pay for your unexpected expenses? Read on to learn more.
The Importance Of Having Emergency Savings During Debt Payoff
When I was waist deep in debt and eager to pay it all off, I knew I needed to build a small emergency fund first. Why? Because if a random expense popped up, I wouldn’t have to incur more debt to pay for it.
An emergency fund also protects your cash flow and allows you to keep making debt payments. This, in turn, helps you work toward your other financial goals.
How much you decide to save is totally up to your needs and preferences. The best thing you can do is break down your big savings goal into bite-sized pieces. For example, I truly wanted a $10,000 emergency fund but decided to challenge myself to save one-quarter of that amount, which still made me feel comfortable during my debt payoff. I achieved this goal.
I established a $2,500 emergency fund during my first year of serious debt repayment. I did this in just four months. How? I did one thing that I recommend you do as well. I started paying myself first.
Start Paying Yourself First
Building an emergency fund fast is no easy feat, but when you commit to paying yourself first, it becomes more manageable. Not only that but you’ll be more likely to get the results you crave. It worked for me and it can work for you too.
The concept of paying yourself first is simple and refers to sending money straight to personal or retirement savings as soon as you get paid. Think about the first thing you do when you receive your paycheck. Do you pay all your bills? Or, do you go out for a nice dinner or buy something you want? You may think that you’re doing these things to take care of yourself, but you’re actually depleting your own funds by trading your money for unnecessary resources and services. Instead, you can keep more of your money in your possession by paying yourself first. After that, you can feed your emergency fund, save for retirement, and contribute to other savings accounts.
Many people claim they don’t have enough money to save and can’t afford to build an emergency fund. When you pay yourself first, however, that excuse goes right out the window because you’re prioritizing your own personal savings over other expenses. Before I started paying myself first, I would spend money on everything under the sun when I got paid. Then I would wonder why I had no money left to set aside in a savings account at the end of the month.
I realized my process was flawed and I would never reach my emergency fund goal this way. Instead, I set up automatic transfers to a high-yield savings account every two weeks on the same day I got paid from my job. Automating essentially meant my money was out of sight, out of mind while I effortlessly grew my account each month.
Once you commit to the idea of paying yourself first to grow your emergency fund, set a clear goal based on your needs. For example, how much do you wish to save and how long do you expect it to take?
Also, make sure you consider lowering your expenses, especially if you’re not used to prioritizing savings. Odds are, you will have to adjust your lifestyle and give up some expenditures in order to save more money. While you’re at it, don’t forget about increasing your income. I got a side hustle to help me build my emergency savings and pay off debt faster.
Commit to YOU
While you’re building your emergency fund and paying off your debt, keep in mind that having extra income won’t solve all your problems. You’ve got to take the first step: pay yourself first.
If you don’t do this, you run the risk of mismanaging the extra money you make, making impulse purchases and inflating your lifestyle. But, if you commit to yourself, you’ll develop a solid emergency fund faster as failure or procrastination isn’t an option.
Are you ready to grow your emergency fund by paying yourself first?
Sex, religion, and politics are among some of the most commonly avoided topics at the dinner table because, well, they tend to make people feel uncomfortable. Here’s another topic that can be just as taboo: money.
Yet, contrary to what you may believe, you may actually want to talk about money at one of the most prominent dinner tables of all: the Thanksgiving dinner table.
Sure, Thanksgiving is all about giving thanks, making memories and spending time with family and friends. But, while you’re all together at the table, why not make the conversation about money? Here are a few reasons why this may prove to be a good idea:
- Money shouldn’t be taboo. Money should never be a taboo topic in your household. Yet, according to Reuters, Americans would rather talk about death than money. As a result, more than half of the country admits to not having enough money saved to cover a $500 unexpected expense, and a vast majority of Americans can’t afford to retire. To avoid going down this road, it’s important to talk about money openly in your household. Another added bonus: this is a good way for your kids or other children at the table to learn about financial literacy.
- All your family will be together. Another great reason to bring up money at Thanksgiving table is that this way you can have an open conversation with all your relatives at the same time.
- It’s a good way to discuss your holiday spending plans. People spend the most money during the last two months of the year on holiday related expenses, including gifts and travel. In fact, consumers spend an average of $1,000 extra during the holiday season. If you are trying to budget or simply can’t afford to spend the extra dough, having an open discussion with your family about your finances may be a smart money move. This way you’ll be more apt to eliminate stress and enjoy the holiday season with your loved ones. .
While there’s no doubt that money is an important subject to discuss during the holidays, talking about finances can still be awkward. Here are 5 easy ways to talk about money at the Thanksgiving dinner table.
1. Ask Everyone About Their Short and Long-Term Goals
An easy way to bring up money at the Thanksgiving dinner table is to ask everyone about their short and long-term goals for the future. This way, no one feels singled out and everyone gets to share where they see themselves going financially, professionally and personally.
Trust me, money will come up during this conversation and it’s a great way to discuss how everyone will make their goals a reality right before it’s time to start setting New Year’s resolutions.
For starters, you can discuss what type of legacy you want to leave and how finances can help you get there. You can also ease into the topic of medical and financial needs for older family members or your aging parents.
2. Answer the Famous, “How Have You Been?” Question with Financial Flair
It’s almost guaranteed that a relative is going to ask you for a life update at the Thanksgiving gathering. This is the perfect opportunity to launch an indirect conversation about money.
For example, instead of disclosing details about your job or your relationship, share some financial successes or failures instead. Maybe you’ve been doing a great job with sticking to your budget, saving up for a big purchase, or finding new ways to make some extra money on the side. My husband has been driving for Uber and Lyft for about a year and it always prompts some great conversations about side hustles and extra income at family gatherings.
3. Play a Family-Friendly Game About Money
Adults love games just as much as kids and since most places are closed during Thanksgiving day, my family and I like to relax after dinner and play board games or watch movies.
If your Thanksgiving gathering often turns into a family game night as well, choose a fun game that promotes financial literacy and wellness. Some of the best games that teach people about money include:
- Game of Life
- Easy Money
4. Talk About Financial News and Current Events
Current news and events are commonly discussed at the dinner table. You could flip the script by bringing up some personal finance news instead by mentioning a study or article you recently read. You could also discuss a recent financial news story you saw on TV. Typically stories abound about Black Friday and consumerism during Thanksgiving week.
5. Share Information About a Charity Event
Being able to give back and help those in need is important to your overall financial wellness.
As you go around the table and reveal everything you’re thankful for, you can share information on an upcoming charity event your family can volunteer for. Whether it’s passing out meals, donating gifts, or providing a service, this can be an impactful way to discuss the giving aspect of money and money management.
Be Inclusive and Steer the Conversation
Using the tips above, you can turn an uncomfortable holiday conversation into a productive discussion about money.
Just remember this final tip: if you’re going to bring up money at the Thanksgiving dinner table this year, focus on being inclusive and addressing everyone. This way no one feels targeted or left out.