It’s tax season!
Over the years, this time of year has become more significant. Not just because it really hits that I am a real life adult but it sets up the financial responsibilities I must take on for my business. I am an independent contractor, also called a 1099 employee. I work for myself and I am paid by a company to perform services rather than hired as an employee to complete a job. I am responsible for taxes (social security, state and federal taxes) on a quarterly based on projections calculated by my accountant.
Although I would like to blow whatever refund I receive on frivolous things like I’ve done in the past, I’ve decided to put a plan in place for this year’s refund.
Responsible ways to use a tax/school refund:
Prepay therapy sessions: Because this is already a line item in my budget prepaying for therapy sessions opens up funds in my monthly budget for other things.
Continuing education: As a therapist, I must complete a certain amount of hours in continuing education. Using my refund for workshops and classes will only help further my career.
Pad a sinking fund: I’m choosing my car fund this year because I do not live within city/county limits of public transportation so I want to be able to take care of anything that arises. This winter, I got a nail in my tire and had to replace it. Thank goodness I had extra money that month but it could have been really bad.
Prepaying any monthly expenses: Paying bills that you know occur every month (e.g. rent, phone, internet, Netflix, electricity, etc.) I plan on using a trick I learned online and buying discounted gift cards to use for my online subscriptions like Netflix and Apple. I’d like to pay my car insurance semiannually but I don’t think my refund will be quite that large.
Padding my monthly marketing budget: Another way to invest in my business, get my name out there, and make myself more profitable.
Stock market/CD: Adding a stock option to my financial plan with money I wouldn’t mind losing or purchasing a certificate of deposit so that my money grows at a steady rate.
Stockpiling Necessities: Out of the fear of the Coronavirus brought about an idea of stockpiling. Stocking up on things like toilet paper, soap, laundry detergent and other household things you use regularly as well as pantry items you enjoy like rice, pasta, beans, etc. Buying these things in bulk will cut the line items down on a monthly basis
I may not be able to do all the things on my agenda. It is more useful to me in the long run to have a plan in place that can apply to whenever I have surplus income than to plan after receiving the surplus because I haven’t curbed my spending habits just yet. How are you planning on spending your refund?
I am an associate licensed marriage and family therapist who uses self disclosure and believes that it can be helpful in the therapeutic process; however, although this blog may be helpful, it is not meant to be a substitute for therapy or professional financial advice.