Monday Morning Money Moment: April 24, 2017
Tax Returns…What are you doing with it?
Happy Monday Folks! I hope your weekend was full of fun and relaxation. Mine, of course, was slinging draft to London’s Finest. As April comes to an end it brings to an end tax season across North America. What that also means is that some, I hope all of you, will be getting a nice little tax return. When that nice cheque comes in the mail or those funds get put into your account do you know what you are going to do with it? I’m sure you do as most of us think about exactly what we are going to do with that money the second we find out how much we are getting. My post today is about taking a pause for the cause and rethinking what you might do with your tax return. Hear me out, this is an important one.
I think it is important to first understand what exactly a tax refund is. A refund is not a gift. It isn’t free money. It is not a government kickback. A tax refund is YOUR money, never forget that. You were taxed too much and therefore the government is giving you some of YOUR money back. Now let’s think about if you did not pay too much in tax and got no return. During the course of the year, you probably would have allocated that “extra” money towards bills or even spend it on life. So if you knew that every year you were getting a return would you adjust your tax paid during the year so you don’t get one? Most people would say, “No, I like getting a return.” If you are planning on blowing that money on something fun or something exciting then why not just adjust your tax paid during the year. Keep that money in your pocket and have extra cash every month.
What I am getting at is this; you need to think hard about your money. Most of us like getting a return. I know I do! But what is the purpose of this cash? Think about it. If you are paying a little extra tax every paycheque and then receiving it all back at the end of the year do you know what that is? THAT, MY FRIENDS, IS A SAVINGS PROGRAM. So what are savings for? Are they for blowing on a vacation? Maybe. Are they for a rainy day? Maybe. What you have to ask yourself is why are you subscribing to a forced savings program if you are not doing something constructive with it?
We all need to think hard about our money and what we use it for. If you don’t have savings then why are you blowing a tax return? If you don’t have a TFSA then why are you blowing your tax refund? Even worse, if you have debt then why are you blowing your tax refund?
This is YOUR money. Not the governments, not Cancun’s, not Roger’s mobile.
My goal is to save my clients money and get them thinking about my constructively about their money. Before you blow that tax refund tune in tomorrow for the Tip of the Week. It might just make you a lot happier than a new TV. Thanks for reading my Monday Morning Money Moment. Happy saving friends!
“The only thing that hurts more than paying an income tax is not having to pay an income tax.” – Thomas Dewar
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Joseph James Francis is a Financial Advisor. You can find him on various social media platforms and at www.budgetboss.ca.