It’s that time of year when people are working on their tax returns. While it may be a lot of unwanted work to file the tax return, a lot of people get excited about filing their tax return because it means they get a big tax refund.
My question for you is, “Should you get a big tax refund?” If you do like getting a big tax refund, then it means you had too much taxes withheld from your paycheck throughout the year. Not only that but you gave the government an interest free loan throughout the year.
Here’s a simple example. Let’s say that you get a $6,000 refund. That’s a lot of money. Now you can go on a vacation, pay off some debt, or buy something nice for your self. If you get a $6,000 refund, that means that throughout the year you had $500 a month that was over-withheld from your paycheck each month.
Let’s say you’re car needs to be replaced. you can get a nice car for $500 a month. Or let’s say your house is getting a bit small. Just think if you added that $500 a month to your existing house payment. How much of a nicer house could you get with an extra $500 a month.
Next time you think about the getting a big tax refund, think about what you could do with the money if you could use it throughout the year.