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Tax Returns and Found Money

We have an odd attitude towards tax returns and pretty much any money we get from the government. As this money falls outside the limits of our regular salary, it usually hasn’t been allotted to pay any particular bills, and isn’t needed for day-to-day expenses. So, what do we do with it? We spend it with the same attitude we would towards a lottery win.

Why?

Let’s dissect this choice into a few important points.

Where does a tax return come from? While it seems like a large lump sum, a tax return is actually a return of money that you overpaid to the government. It means that the government got a hold of your money and held it for months until you filed a return to get it back. This money isn’t found, it was yours to begin with.

Why do we blow the money? Not all of us do, but the problem with tax returns is that they are the gateway to spending more. Perhaps you use your tax return for a vacation, but then need to pay for extra airport taxes and fuel fees from your regular money. Or perhaps the tax return is a payment towards a home renovation, but you need to pay the balance of the amount yourself.

What is our best use of that money? Since a tax return is viewed as “found money”, many people don’t put much thought into how they can spend it to best benefit themselves. While a vacation can be the most benefit, maybe saving the money so that you can replace an aging car when the time comes, or using the money to pay down debt is better. Just because you receive money you weren’t counting on doesn’t mean you shouldn’t maximize the value you get for it.

So, whether it is a tax return or some other type of found money, you need to think carefully on what you do with it. Don’t get caught up in the giddiness of having extra money, instead, treat it like any other paycheck and use it in whichever way benefits you the most.

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One Response to “Tax Returns and Found Money”

  1. Nathan Lee says:

    home renovation these days are quite expensive due to the rise in material cost’-.

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