How You Can Make 2024 Less Stressful


Emergency Fund, Financial Independence, Financial Planning, Financial Security, Roth IRA, Saving, Tax Refund


January 11, 2024

The recent economic news that inflation has now slowed down is indeed great news, but it doesn’t erase all the pain that sharply rising prices in 2021 and 2022 have caused. Inflation is indeed lower, but that doesn’t mean prices have come down, just that they aren’t rising as quickly.

 

And I know that is a burden for so many of you. A recent analysis estimates that the rising cost of essential needs such as food, gas, utilities, and health care has created a budget deficit of more than $2,400 a year for middle-class households.

 

Which brings me to the topic of tax refunds. We’re soon heading into the heart of the tax-filing season. And many households will be receiving a refund from the IRS, and some of you might also be in line for a state tax refund.

 

Last year the average federal tax refund was more than $2,700.

 

Do you see where I am heading here? If you expect to receive a tax refund, I want you to make a commitment to yourself how you will use that money. The act of making that commitment is so important; it is the glue that gets us to stick to a goal.

 

And be specific. I want you to write down what you intend to do with a tax refund(s). Maybe it is the breathing room to cover essential bills. Or use it to pay down credit card debt. With the average interest rate on credit card balances more than 22%, reducing that costly debt is going to be a great win. Another great use of your tax refund is to boost your emergency savings. Or contribute to a Roth IRA.

 

The key is that whatever your goal is, you make the commitment now to how you will use your tax refund. In addition to writing it down somewhere you will see it at least once a day, I encourage you to tell someone you trust what your intention is. The act of sharing a goal helps us stay on track, and a good financial-goal buddy will also cheer you on.

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