Now that you have your spending plan made for your taxes, you are ready to learn a couple simple tips for making this plan work for you. For many people it is hard not to go out and spend just a little bit here and then a little bit here ….. finally totaling up to “where did all that money go”. Small amounts add up quickly. Very quickly.
The best way I have found to keep the plan in front of me is to write out on an index card what the money will be spent on. Write down each item and the amount you have given each one. When the money comes in, place it in an account not often used. This will keep it from being “mixed up” with other money. It will also keep you from thinking you have more money to spend this week than you actually have. Remember, this tax money is already spent, on paper anyways.
As you purchase or pay for the items in your spending plan, transfer or get the cash out for the exact amount of those items only. Keep in mind to cross those item(s) off the spending plan. Now when you add up the items left on your plan, it should equal or be greater than the amount in the account. If an item does not cost as much as originally figured you can always apply the extra to a debt or add it to your savings.
Remember that the key to making any spending plan work for you is to tell your money where to go, what to do and when to do it. You must be in control of your money. You must plan before you get the money or at least before you ever cash the check.
I want to show you what I have on my Tax Refund Spending Plan:
Total of refunds $ 6205
Leftover Funeral Expenses 350
Prom/Senior Expenses 500
TV/Streaming device 500
Vision Expenses 350
Notice that I stayed within the 5-10% range for an item our family really wanted. I think it is important to include this item in your plan. It is like a reward for the hard work and willpower it takes to follow the plan.
How will you spend your tax return? Do you have a written plan for it?
Making a habit out of living frugal …..