After working for years doing typical monotonous work in Cubicleville crunching away at numbers, balancing accounts and adjusting general ledgers, I thought I had a pretty firm grasp on my own financial future. Sure, I started a 401k and put a percentage of my pay away for that rainy day, years from now. I invested other monies through my financial advisor. A savings account and a CD were set up and I put cash in them when I could afford it. Finding the best rates of return was a fairly simple process, as I used the internet as my key source of research.
Still, although I feel it’s just paycheck to paycheck, I live comfortably. What I’d really like to do is spend the saved money now and buy things like a new car or a cost-effective vacation on a beach in Puerto Rico, sipping a Long Island iced tea with a colorful little umbrella off the rim of the glass. But my plan for retirement must come first because aging doesn’t promise a financial payoff unless I strategize. Knowing what I can afford now and what I must stow away is the key to living in the present. For the time being, I can only dream of what bright days my future might hold.
The mortgage, car loan, insurance, and utilities have all been factored into my finances. The invoiced amounts for these expenses are pretty rigid; I know about what it’s going to cost each month. Ensuring there’s gas in the tank and food on the table is the extent of my variable expenditures each month. It’s not a pretty picture, that feeling you’re just one missed payday away from financial ruin. Still, I cut costs where I can and keep my head held high as I know one day I’ll reap the reward of planning ahead.
But there is one event I look forward to every year: tax season. Many people cringe when Uncle Sam comes around to collect dues, but if you’ve played your cards right (like me), you’ll have reason to smile when it’s all over with. I’m fortunate that I’ve never had to pay out come April 15th. Instead, I receive a refund and it generally amounts to the income I’d receive for two weeks’ worth of work at my menial desk job. And no, I don’t earmark this money for my future. I spend it frivolously. Okay, so maybe I’m not so haphazard with how I spend my refund check, this is a site about financial smarts after all. I do spend the funds on things like home improvement projects (increasing my home’s value), clothing (increasing my self-worth), and incidentals (new laptop, TV, etc.).
With proper and effective tax preparation it’s possible for any law-abiding citizen to get the most out of tax time. A tax refund isn’t money that’s handed out because the government is feeling generous, but funds that are owed to you because you paid too much throughout the year. In addition, there are programs and special incentives for things like increasing your home’s energy efficiency and pursuing a higher degree that will pay off handsomely in the form of tax credits. Finding all the credits and write-offs available to you can be an arduous task, so it’s best to find the right software to get the job done for maximum outcome.
Receiving a federal refund isn’t guaranteed, but it’s fairly predictable, unlike the financial forecasts of stocks and other investments. I try to invest my tax refund better. I also never plan on getting money back, but the system hasn’t failed me yet. And, if it doesn’t work out to my advantage now, there’s always next year or the years ahead, when I’m financially free and can look back on my days balancing someone else’s ledgers, wondering how I ever managed to get on a beach in San Juan.