Remember how I finished my taxes last weekend? Well, my federal tax refund deposited into my account on Friday! It took less than a week for everything to be processed. If that's not incentive to do your taxes early, I don't know what is.
Of course, if you owe money, you might think waiting is your best bet. And I think you would be wrong. I actually owe money to the state (a whopping $30), and I was able to schedule that debit for any date I wanted (prior to the filing deadline, of course). I picked mid-February, figuring that with the 21 day turnaround on the federal refund, the money would be deposited and ready to go and I would never miss that $30.
So what am I doing with my tax refund? I've parceled it out in my YNAB budget categories. I have certain annual bills that I know will come due throughout the year, and while it's a good practice to set aside 1/12th of the amount every month, it's also nice to just dump the full amount into a budget category and let it sit (and grow ever so slightly) until the bill is due. It's nice to know that a bigger bill is "paid" well before I receive the paperwork.
Of course, this implies that my budgeting is perfect. It's not. After the holidays, my budget categories were not doing so well. I had overspent in a number of areas and my tax refund helps me zero that out. The goal moving forward is to try to keep my numbers tighter. I'm still waiting to see what my cable bill is, for example. I'm also really keeping track of my online spending, which is, for me, where things tend to go off the rails. But I figure if I just keep plugging away at it, eventually I'll end up where I need to be financially. And for now, I'll just enjoy that nice bump from my tax refund.
I know a lot of people treat their tax refund as an excuse to go spend money. "Hey, free money! Let's go shopping." But it's not free money. It's your money that the government was holding for you. I know that some people treat it as a savings account - they plan to buy something big when the tax refund comes in. I guess that's not the worst idea. It's better than going into debt. But me, I just use it to plan ahead. I'm boring that way.
Are you getting a tax refund? What are you going to do with it?