On Feb. 12, the Internal Revenue Service began accepting and processing 2020 tax year returns.
While many people don’t look forward to the process of filing taxes, a majority of Americans enjoy the benefit of receiving a refund.
According to Business Insider, in 2019, the average individual income tax refund for Hoosiers was $2,612.
Like any other form of income, it’s key to have a plan for where this money will go, said Molly Marshall, health and human sciences educator for Purdue Extension Jackson County.
For Hoosiers receiving stimulus payments, Marshall said those also can be used to add to your savings or emergency fund and pay off debt.
To make the most of your 2020 tax refund and stimulus money, consider the following suggestions:
Boost your savings
Did you know the IRS will allow you to direct deposit your tax refund into three different accounts?
It’s easy to save money by depositing all or part of your tax refund into a savings account. Saving money now is one way to be better prepared for future expenses.
It is recommended to have at least three to six months of expenses saved.
Create an emergency fund
Along the same lines of boosting your savings, if you do not have an emergency fund in place, it’s best practice to have $1,000 saved for emergencies.
This $1,000 can be kept in your savings account but is in addition to your three to six months’ expenses.
An emergency fund will help you cover those unexpected expenses without increasing your debt.
Pay off debt
Do you carry a credit card balance? If so, consider using your tax refund to pay off that debt.
Ridding yourself of interest-building debt gives you more money in the long term. If your refund will only cover a portion of your debt, consider making a plan for the remaining debt.
As mentioned above, people need a plan for any form of income they receive.
When payday rolls around, many consumers try to figure out which bills they will pay and which ones must wait until another paycheck comes in.
With costs increasing for necessary expenses, such as gasoline, utilities and health care, consumers are finding it harder to make ends meet.
If you, like many others, are wondering how you can stretch your paycheck and make your money go further, you will want to attend the program “Where Does Your Money Go?”
Marshall said a fresh look at your financial situation can give you new insight into ways to change spending behaviors in order to have more money.
If some unnecessary items are eliminated or postponed, there may be enough money coming into your household to pay for expenses that are needed.
This program gives participants an opportunity to rethink how they are currently spending money and plan for future spending.
“Money management is an important component of our overall health and well-being,” Marshall said. “The content of this course supports the skills needed by consumers to make better informed financial decisions.”
“Where Does Your Money Go?” will be offered virtually from noon to 1 p.m. April 22 and 29 via Zoom. Registration can be completed online at bit.ly/WDYMGRegister.
The first session’s topic will be “Is There Ever Enough?” and the second is “A Road Map for Spending.”
What: “Where Does Your Money Go?” program
When: Offered virtually from noon to 1 p.m. April 22 and 29
Information: Email firstname.lastname@example.org or call 812-358-6101