Is Your Tax Return Splurge Getting In The Way Of Your Wealth?

If you’re lucky enough to be getting a positive tax return this year, you’ve probably already worked out how you’ll spend the money. Tax returns can feel like you’re winning the lotto, can’t they?

It’s like bonus money. So, after a year of being frugal, this sudden windfall can tempt you to be a little wild and loose.

I know if I won $2,000 in the lotto, I’d want to spend it on a family holiday, new pair of ‘fancy’ running shoes, or even a 65” Ultra HD TV for my soon-to-be Netflix bingeing.

But, I need to break something to you.

Your Tax Return Isn’t The Lotto

It’s not the tax man being all nice and warm-of-heart deciding to cut you some slack this year and give you a performance incentive. Far from it.

You’re just being refunded money you’ve overpaid in tax. Yep. It’s your money, folks. Money you worked hard to earn – money you didn’t ever see, but now you have in your cool, little hands.

If that was a regular pay check, would you cash it in and head straight down to JB Hi Fi to purchase your new tele? Or, would you be more strategic with it? Put a little bit into your savings, pay off your credit card, contribute a little extra to your mortgage?

Think About Your Long-Term Goals

Now, I’m not saying you should deny yourself any reward! That’s not how I roll. But, I do encourage you to think more wisely about the opportunities missed by throwing your wad of money away on something superficial and fleeting.

Try thinking more strategically about how this extra money could enhance your financial well-being in a more meaningful way. If you’re saving to buy a house, or a much-needed, much-desired European getaway, or you’re trying to turn a hobby into a business – then really consider how any short-term gratification will hold you back from achieving something far greater.

Reframe Your Thinking

It’s the difference between want and need (it’s a big difference!). Not buying something you need will always result in a negative outcome (like, no food = starving). However, if you only want that luxury Prada handbag – well, you’ll still have food on the table tonight (maybe more of it!).

Separating your wants from needs is simple home economics.

I believe in having a healthy mind, healthy body, and healthy finances. I believe we need to reward ourselves occasionally to boost our spirit and keep our head in the game – and you should.

But – that doesn’t mean you need to spend it all on trinkets and luxury items that don’t provide any value or benefit to your life other than to show your friends ‘you have this’. Why do we place unwarranted emotional attachment to ‘things’?

You can do so much more.

A healthy tax return is your opportunity to enhance your financial position and move your wealth forward, and isn’t that worth more to you?

If you need help putting a simple savings strategy together so you can reach your goals sooner, get in touch.

‘Do something today that your future self will thank you for’ – unknown