Dare_To_Dream_Header.jpg

5 Tips to Fight Tax Return Money Euphoria

Posted by Carrie Rattle on Apr 25, 2017 8:15:00 AM

We all know the feeling – when we’re getting a tax return and we feel, well, rich. Not rich like a millionaire, but richer than we were yesterday. It’s like gold falling from heaven. And then it starts. The “what can I use this money for” dreams begin. And believe it or not, we probably dream spending 4 or 5 times the value of our refund. This is money euphoria.

Nothing is Free

Some of us treat a refund like “free money” or “new found money”.  In reality, it comes from our hard-earned cash, and from over paying taxes. It may feel like a windfall instead of part of our income that we base all our spending and saving on in the first place.

And yes, I know. I’m a wet blanket - no fun - the heart of darkness. But I care about all of you and all of my clients. This wealthy feeling can be very dangerous to the pocket book. New found money somehow gives us permission to spend it on instant gratification.  Instead, let’s think of it this way:  it has been tucked away for so long that we should try to live without it.

WomenandMoney.jpg4 Steps to Prepare for Your Refund

If you’re expecting a refund, here’s how to ensure you manage your money euphoria and emotion around the perception of new-found wealth.

  • DO NOT start buying anything before you get the refund. If you do, the wealth euphoria will lead you to buy and buy, until the entire refund is gone before you even get it.
  • CONSIDER saving a certain percentage – maybe 15%. Start building an emergency fund, college fund, or IRA contribution for the year. It is important to save for the future. If you're doing a good job with that, you might want to take this money and pay down debt instead. What it shouldn't go to is stuff you want rather than need.
  • GIVE YOURSELF A SMALL TREAT. Maybe 5%. Deprivation doesn't work, so a little treat helps.
  • START making a list of all the things you’d like to spend it on or apply it to (like paying off a credit card or two, or an item you really need). You’ll find the list can get long fairly quickly.
  • PRIORITIZE the list, putting an accurate dollar value beside each item. Everything beyond the total value of your refund gets crossed off, or put aside until you can afford to buy it and pay it off.

I Want  Money-Life Balance

Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Behavioral Cents, LLC and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.

Carrie Rattle is Founder of Behavioral Cents and a 30-year veteran executive of financial services. Behavioral Cents helps women achieve independence, freedom, and a bigger voice in the world. By building a fatter bank account women can confidently walk away from a bad job, build a business to change the world, or live on their own income. We work in a private, non-judgmental atmosphere with a program tailored to change your money behaviors for the better – without deprivation. Thoughts always welcome: carrierattle@behavioralcents.com.

 

 

Topics: Money Behaviors

Subscribe to Email Updates

Join Our Self-Change Email Program

Recent Posts