Budgeting Your Refund

Hopefully some of you received a small or substantial refund this tax season. With that extra money adding a little pep to your step, it would be easy to spend it all on fun dinners and new clothes. Don’t get me wrong — a little R&R may be in order, but you will enjoy your splurge even more if you plan your spending. So before you hit the mall, make a list of the things you need and want to spend money on during the next couple of months. Then decide how you will allocate your refund to make the most of your extra pocket cash and maybe add a bit more to savings in the process.

Here are some questions to consider:

1. Do you need or want to do any home improvement projects soon? I recently found a mouse in my house and discovered the little stinkers were getting into my kitchen through a hole in the wall. With that in mind, I allocated some of my funds to fixing up the outer wall and buying some mouse traps.
2. Similarly, are you planning any yard projects this spring or summer? I just moved into a new place, and the previous tenant left quite a bit of debris in the backyard. I decided to budget some money for landscapers to clean up the yard, and prepping for the summer, I also put some away for weeding.
3. Look around your house. Is there anything you’ve been buying a lot that you should add to your monthly budget? I recently noticed that my husband and I have been consistently buying board games, so we decided to make that a separate part of our budget each month. Planning to buy the games will limit overspending while also allowing us to partake in something we enjoy.
4. Consider your car. Do you have any major expenses coming up? I have to update my car registration this month and fix a leaky tire. Some of you may consider a spring wash or general check up, especially if you’re planning a road trip this summer.
5. Never forget about your health! What expenses do you have coming up in this category? Are there any that will not be covered by insurance? While my dental check up is covered, my therapy is not, and because I’m planning to switch therapists, I made a note to plan for any changes in cost.
6. Finish your list off with any purchases you’ve been talking about but not gotten around to buying. For me, that was a new humidifier and a new pair of shoes for the summer.

After you make a list of the things you need and want to buy, divide the purchases by month. Then add them to your monthly budgets and decide how you will pay for them (extra income, investment interest, tax refund, ect.) I like to use the app YNAB to keep track of my incomes and expenses because it allows me to easily go into future months and add one-time expenses, such as buying a new car tire. However you choose to track, hopefully this list will give you an idea of how much of your refund you need for the above expenses and how much of your refund you can put into savings or use for some extra splurges.