Let’s talk taxes.
As I head into another smaller week of fund deposits, my mind invariably starts to wander to the tax refund we’re getting.
Before I go further, I know some of us don’t get refunds. And while it probably stinks around tax time to feel left out because everyone is either celebrating or bemoaning their tax refund amount, I hope the reason you are not getting a refund this year is because you cracked the code on withholding, and your paychecks have been bigger month to month.
That being said, the B family never seems to crack the code because we pretty consistently get refunds. And then we do this thing where I casually say, “Wouldn’t it be fun to just blow our refund on a huge Disney trip?” And Mr. B laughs like I made a joke, but deep down we both know I was only half joking.
But the half of me that listens to sense knows that there are bigger, better things to do with your return than blow it all on a Disney trip. (Though, for the record, none of them are as fun.) The goal of couponing and saving to Disney is to fund trips in creative ways (couponing, earning apps, budgeting) that supplement your income. Put simply? Couponing to Disney wants you to pay your bills AND go to Disney, not accrue more bills because you went to Disney.
With that in mind, here are some things you should consider doing with your tax refund before blowing it all on a Disney trip.
- Establish an Emergency Fund.
This is key. Every family should have $1000 to $1500 put away for an emergency: medical, car, house, or otherwise. Before you think about the shopping spree your refund can fund, make sure you have an emergency fund. And if you already have an emergency fund? Feel free to add a little more to it. Emergencies come in all shapes and sizes. When we started doing the Saving to Disney course, we agreed to put a percentage of every tax return or bonus check into our emergency fund. And last year, when the water pump connecting us to our well broke and had to be replaced for $3400, we were VERY glad we had done so.
- Pay Down Debt
This seems like a no-brainer, but debt isn’t fun to think about and so sometimes slips our minds. Making a large payment on credit card debt can lower your monthly payments. Tax time is a great time to pay off big chunks of debt because it’s still early into the new fiscal year. Having less credit card debt payment can free money up for other things…like Disney funds. ;) Or house down payments. Or whatever the big thing you’re saving for is. Again, we commit to using a portion of every tax refund to paying down debt. All our debt: credit cards, house, and school loans get a chuck paid off with whatever returns we get. This makes our monthly payments more reasonable year after year, not to mention less stressful.
- Establish Saving/College Funds for Children
Whether your child wants to go to college, a trade school, or travel the world, they’re going to need money. And it is going to be a strain on them (and you!) if they turn 18 and just tumble into the world with only the clothes on their back and the money they made working at Baskin Robbins over the summer. If possible, establish a savings fund (or college fund) for your child now and commit to putting a portion of your tax refund in it every year. All the B girls have a savings account at our local credit union that matches incrementally what you put in. If you put in over $100 in one calendar year, the credit union will match that $100. That is free money for my kids! Lots of financial institutions offer similar programs, so now is a great time to start a savings fund for your child. You can use it as a savings education tool for them as well: helping them decide what percentage of allowance and gift money goes into their savings account and taking regular trips to deposit money in the bank. Start them now on a habit that will serve them well all their lives!
- Anticipate School Events/Camps/Extracurriculars
This one I learned the hard way. It’s our oldest’s first year in real school and I was taken unawares at how many “unscheduled” fees have popped up. Like, I knew I would have to pay a book rental fee. I did not also know I was going to have to donate $5 for the Dr. Seuss birthday celebration, or $5 for the Donuts with Dad event, or $5 to make a shirt for 100 Days of School. All those $5s add up. Each of those $5s could have been spent on a snack at Disney World! This year we made it work with pulling from the entertainment budget and random cards from grandparents, but next year we’ve got a new plan. We’ve calculated everything we’ve paid this school year in unforeseen fees, as well as known ones. We’ll put aside double that from our tax return for next year. This way our income/budgets won’t be affected, and neither will our vacation fund. Those of you with older kids who do a lot of field trips and extracurricular events, this is a great way to make sure you child still enjoys the experiences that come along with school without busting your budget!
When all of that is said and done, if we still have money left over, we’ll put it in the Disney Fund. It certainly isn’t as much fun as planning which Deluxe I’m going to stay in with my return dollars, but establishing a sound financial system will actually enable more vacations down the road. We talk about this constantly, but the best way to enjoy Disney is to enjoy it with smart saving and smart spending. That includes tax return money.
What do you do with your tax return money? Is there something we missed? Share your financial wisdom in the comments!
Kristen B. is wife to the best Prince around, mama to the spunkiest little princesses, and lover of all things Disney. She started her savings journey five years ago and is now dedicated to making her family’s wishes come true one coupon at a time. She is so excited to take her love of saving to the next level and share her journey with you! Click here to catch up on Kristen’s Savings and join in on your own savings adventure!