This year thus far has proven why individuals should not solely rely on receiving tax refunds to make big purchases and splurge. Now, don’t get me wrong, receiving those nice checks at the beginning of the year is a great feeling. It’s an occasion where most people are happy, splurge, “ball out”, etc. And what happens after the funds are all gone. You’re in wait mode until tax time yet again. But if you use your refund to increase your savings, pay off debt or invest, then you are using it to
help your future nest egg in many ways.
With the current complications from the IRS systems early in this tax season, it has made people nervous and fearful of when and if they will receive their tax refund when needed. Also, with the increase in systems, verification forms, etc., the IRS is performing more audits and more letters are being disbursed to tax payers to prove things such as filing status, dependency and itemized items listed on tax returns. True enough if proven, a refund will still be given but it puts a 6-8 week delay or even longer on receiving funds. State Taxations are also reporting delays in issuing refunds more and more every year. They seem to audit more than the IRS so they can potentially NOT have to pay out many refunds and rather have you pay more money to fund the state.
As individuals, we should be saving more and spending less for times just as this. Just imagine if you had several thousands, sitting in the bank? Would you be so concerned and consumed that it is tax season? Probably not as much. Having a nest egg would give a sense of security, feel of freedom and ease of worrying.
We all have moments where life happens to throw emergency occurrences or life changing situations at us. But we should become proactive and think about how we can be better prepared for life happen moments and also become better at how we handle our personal finances.
What are you doing to prepare for life happen moments? How do you think you can become a better manager of your personal finances?