With the tax filing deadline around the corner, many individuals might be wondering what they are going to spend their refund on. A more important question might be, “How much can I save?” With the COVID-19 pandemic continuing on, many companies have had to lay off or furlough employees with countless more experiencing reduced hours. While it might seem like a good time to splurge, we learned in 2020 that you can never be too prepared for the future.
As you’re preparing for your potential refund or if you’ve already received it, here are a few items you should also be evaluating:
- Nonessential recurring expenses: Write a list of all nonessentials and decide which ones are important enough for you to keep and which items you can cancel. You can also see if you can pay off the ones that you want to keep. If you want to keep that gym membership see if you can pay for the entire year and potentially get a better deal!
- Credit card balances: Look at what credit cards have the lowest balances and see if there is an opportunity to get some paid off with your refund.
- Student loan payments: Do you have lingering student loans? Take a look at what you owe and plan to use your refund to make a dent in your debt.
- Restrict online shopping: Unsubscribe from all retail emails, don’t save your card information online, and delete shopping apps off your phone to make it harder for yourself to shop online.
- Prep for grocery shopping: Before you go shopping or place your delivery order, set aside a little time to create a grocery list. Not only will it help you stay on track to purchase only what you need, but it’ll also stop you from eating out as much.
The most important step is to have a plan. As soon as you know if you will be getting a refund, you should decide what to do with it. Setting time aside to prepare and plan will ultimately pay off in the long run. For help with determining how much you need to set aside in savings and how to build up that account, reach out to our advisors at https://pciawealth.com/contact-us/.