[0:00] Are you getting a tax refund? If you are you, you don’t want to miss this episode, because we’re going to talk about the do’s and don’ts for your tax refund and how you can prioritize that to meet your family’s needs and be wise with this income.
[0:25] Welcome, welcome to the All Things Money Podcast! My name is Mayra Alejandra Garcia, a financial coach that is here to inspire you to reach your goals, grow your net worth and be wise with money. So we’re going to be talking about the do’s and don’ts with your tax refund. If you are getting one, first, you need to prioritize the baby step you are in. So, if you don’t know what the baby steps are, listen to two podcasts ago, episode 4, where I go over the baby steps. And whether you are saving for your emergency fund or you are trying to pay off debt, these are the things that you should be prioritizing, because you want to be able to put this money to work. Now, what you shouldn’t do is have this as an excuse for you to go blow the money in shopping or vacations, or simply things you don’t need. So let’s be wise. Let’s make this money work for us and put us in a better position to be better off in the long-term.
[1:49] Now, also, one of the things that is really important to ask if you’re getting a tax refund, is that you partner with your tax professional, and that you change your withholdings to ensure you don’t get a tax refund next year. You’re gonna say, oh my gosh, Mayra, what do you mean, like I need this money, it helps me get through hard times having this money, I can’t like, it’s my savings, it’s like, I don’t feel it come out of my paycheck, so it’s really good to have it. That’s what I hear a lot of people say. However, a tax refund means that you have a savings account with the government at 0% interest. That’s what that means. You are lending money to the government and not getting anything in return. Instead, what you could do and should do, is pay down your debt or save for your emergency fund, bring that money home every single time you get paid, and pay down those things, like for example, if you have a credit card at 20% interest, and you pay that down months in advance, because you’re getting this money coming in, it’s better than paying it off the following year when you get your tax return. You are going to save on that interest the sooner you pay it. So bring the money home. Learn to build that muscle of savings. Learn to be good with your money. Start getting some sort of organization process for you to be able to make wise choices when that money comes in every single time you get paid.
[3:58] Now, rich people don’t have this problem. A lot of them, I would say the majority of them, they understand this concept. They don’t get a tax refund. So, one of the things that I’ve always said is my life improved dramatically once I started listening and taking advice from people that are doing well. And so, when you start watching what rich people do, or wealthy people do, or someone that you admire, then you start picking up of what are they doing, how can I imitate that, how can I get to be financially independent? So these are just little things. These are tips and tricks that the rich do. They don’t get a tax refund.
[4:54] Now, it’s important, like a lot of people think, well, I’m not ready to invest and this is not for me, and it’s just an excuse. If you bring the money home when you get paid, you’re gonna save money in the long-term. You have to be wise with it and you have to manage it well. You can’t be just spending it and oh, I have extra spending money. But if you know that you are trying to learn the skill of managing and keeping your money and having it work for you, then you really need to prioritize this and ask your tax professional to help you change your withholdings, not only federally, but your state taxes, so that you don’t owe anything. The goal is that you either break even or that you owe just a tiny bit. And by oh, a tiny bit, you can maybe a couple hundred dollars, something minimal that you will be able to pay by April 15th.
[6:07] So, that is my tip. If you’re getting a tax refund, you need to stop getting one. Change your withholdings. Now there’s a lot of factors that you need to think about. So when you’re talking to your tax professional, make sure that you talk about what your plans are for the following year. It’s very important that you start thinking about how is 2021 going to look? Is my income going to increase? Do I project that my business is going to make a certain amount of money? And do you have a child in college like I do? Is that child working? All of these are factors in how your income is going to be taxed. So you need to make sure that you ask the questions, that you evaluate what your year is going to look like, so that they can better assist you in making those tax withholdings be as accurate as possible.
[7:16] I want to invite you to look at the Cash Flow Method course that I have at the cashflowmethod.com. And the reason for that, is this money that you get going forward, every single paycheck, is going to go farther if you plan ahead and this course has a budget form, a cash flow spreadsheet, that helps you maximize every penny that you’ve earned.
[7:43] Thank you so much for listening! I would love to ask you to subscribe to this podcast, leave a comment and review, so that other people can find these tips and tricks that I provide every single Tuesday. Thank you so much for being here.