What to learn about tax refunds and how one can profit from them

MOMENT. WE’LL BRING YOU ANY UPDATES ON AIR AND ONLINE AS WE LEARN MORE. AND RIGHT NOW WE’RE IN THE MIDDLE OF TAX SEASON. IT’S A TIME OF YEAR THAT MANY DREAD, BUT THERE CAN ALSO BE SOME UPSIDES TO FILING YOUR TAXES, LIKE GETTING A TAX REFUND. SO JOINING US TODAY FOR OUR MONEY MONDAY TO TALK MORE ABOUT THIS FINANCIAL PLANNING, MEGAN HAMMOND WITH WEALTH QUEST MEGAN, THANKS SO MUCH FOR BEING HERE WITH US. THANKS FOR HAVING ME. SO WE KIND OF REPRESENT THE TWO ODDS HERE. YOU’RE LIKE, I STILL HAVEN’T DONE IT YET. I’M LIKE, I DID IT. GOT MY REFUND BACK ALREADY. ALL GOOD. SO WHEN WHEN IT COMES TO TAX REFUND, WHAT DOES IT ACTUALLY MEAN? AND WHAT DO PEOPLE OFTEN MISUNDERSTAND. YEAH. WELL I THINK THERE’S A PERCEPTION THAT WHEN WE GET A TAX REFUND THAT THE IRS IS SENDING US MONEY THAT WE OTHERWISE WOULDN’T BE ELIGIBLE FOR, SO EXTRA MONEY, BUT THAT’S ACTUALLY NOT THE CASE. SO A TAX REFUND IS REALLY JUST A CORRECTION. IT MEANS THAT WE SENT THE IRS TOO MUCH MONEY THROUGHOUT THE YEAR, AND THEY’RE GIVING US OUR OWN MONEY BACK IN THE FORM OF A REFUND. BUT WHAT THAT ALSO MEANS IS THAT THE MONEY THAT WE GET IN OUR BANK ACCOUNT FROM OUR, OUR JUST OUR NORMAL PAYCHECK IS LOWER BECAUSE WE’VE BEEN WITHHOLDING TOO MUCH AND SENDING IT TO THE IRS. SO WHAT WE WANT TO DO IS TRY AND FIND A BALANCE. WE WANT TO MAKE SURE THAT WE GET AS MUCH IN OUR PAYCHECK AS WE CAN, WHILE ALSO PAYING JUST ENOUGH TO THE IRS TO FULFILL OUR TAX OBLIGATION. THAT’S IMPORTANT BECAUSE YOU WANT TO MAKE SURE YOU’RE GETTING THE MOST OUT OF YOUR BUCK HERE THROUGHOUT THE YEAR, BECAUSE YOU NEVER KNOW WHAT CAN HAPPEN DURING REFUND SEASON, OR YOU KNOW WHAT CAN HAPPEN. LET’S JUST SAY THAT, OKAY? SO ONCE THE REFUND HITS YOUR ACCOUNT, THAT’S THE TIME THAT PEOPLE START TO CELEBRATE. HOW SHOULD PEOPLE THINK ABOUT WHETHER TO SAVE IT OR SPEND IT? YEAH, I THINK THAT WE OFTEN FALL INTO THIS ALL OR NOTHING BUCKET WHERE WE THINK WE NEED TO EITHER SPEND IT ALL OR SAVE IT ALL. BUT THE REALITY IS THAT FOR MOST PEOPLE, THAT DOESN’T FULFILL ANY OF OUR FINANCIAL GOALS. AND SO I LIKE TO USE A BUCKETING APPROACH. AND THERE ARE A COUPLE THERE ARE A COUPLE DIFFERENT VARIETIES. SO SOME PEOPLE LIKE TO BREAK IT INTO THREE BUCKETS A THIRD, A THIRD, A THIRD. I LIKE TO BREAK IT INTO 50, 30, 20. BUT REALLY THE FIRST BUCKET IS IS SAVINGS. SO WE SPEND 50% PUT IT INTO SAVINGS RIGHT AWAY. 30% WE PUT INTO DEBT REDUCTION AND THEN 20% WE GET TO SPEND AND HAVE A LITTLE BIT OF FUN BECAUSE WE CAN BE FINANCIALLY RESPONSIBLE AND STILL HAVE FUN WITH IT. I THINK WHAT WE NEED TO MAKE SURE IS THAT WE PLAN AHEAD OF TIME, BECAUSE IF THAT MONEY GOES INTO OUR BANK ACCOUNT AND WE DON’T HAVE A PLAN, WE OFTEN TEND TO BE MORE IMPULSIVE AND SPONTANEOUS IN OUR SPENDING, AND WE END UP FORGOING SOME OF THOSE SAVINGS AND DEBT REDUCTION GOALS. 50, 30, 20 I LIKE THAT. SO FOR PEOPLE WHO WANT TO MAXIMIZE THEIR REFUND IMPACT, WHAT ARE SOME SMART WAYS TO DO THAT? SO WHENEVER I’M TRYING TO FIGURE OUT WHERE I THINK MONEY SHOULD GO, I LIKE TO ASK MYSELF A QUESTION. AND THAT IS WHERE IS THE BEST USE OF THE NEXT DOLLAR I HAVE? SO WHERE IS THE NEXT BEST PLACE? AND THAT TENDS TO GIVE A LOT OF CLARITY BECAUSE IT TENDS TO TO FOCUS OUR ATTENTION ON THE THINGS THAT ARE GIVING US THE MOST FINANCIAL STRESS OR STRAIN. AND SO IF THAT’S SAVINGS, RIGHT, THE FIRST THING WE WANT TO DO IS FOCUS ON SHORT TERM SAVINGS. MAKE SURE THAT WE HAVE 3 TO 6 MONTHS OF EMERGENCY FUND AVAILABLE. IF SOMETHING HAPPENS, THEN WE CAN START FOCUSING ON THOSE LONGER TERM GOALS, WHETHER THAT’S SAVING FOR A DOWN PAYMENT ON A HOUSE OR RETIREMENT GOALS. IF IT’S SOMETHING LIKE DEBT REDUCTION, WE REALLY WANT TO FOCUS ON EITHER THE LOWEST BALANCE OR THE HIGHEST INTEREST RATE, BECAUSE THAT’S WHERE WE’RE GOING TO GET THE MOST MOMENTUM GOING. BUT REALLY THE GOAL IS FOR US TO CREATE A SITUATION WHERE WE FEEL MORE FINANCIAL STABILITY AND GIVE OURSELVES MORE FINANCIAL PEACE OF MIND. ALL RIGHT, MEGAN, ALWAYS SUCH GREAT ADVICE. MEGAN HAMMOND WITH WEALTH, THANK YOU SO MUCH FOR BEING HERE WITH US AND JOINING US ABOUT TAX