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And now for some good news. I read this year’s tax refund survey results from GoBankingRates.com, and according to their study most people plan to use their refund for either paying down debt or ratcheting up their savings.  My financial planner brain says, “Yay! That’s awesome!”  

What the survey didn’t say was whether the respondents had any plan for what to do with their savings.  Having savings is good, believe me, but I’ve learned that having a plan for your savings is MUCH better. This is because when you have a plan, you’re more likely to stick to it and save even more toward your goals. It’s like rewarding your future self.   

During this time of year all sorts of new and unexpected funds come our way. It’s tax season and it’s performance review season, so no matter your situation you’re probably expecting some sort of cash infusion soon in the form of a bonus, raise or refund.  Given that, I’ve been getting these questions a lot lately — what should I do first?  Spend? Save? Pay down debts?  How much?

While it’s hard to go wrong choosing to blindly save or pay down debts, I’ve got some helpful strategies for making sure you save enough toward your goals and keep rewarding your future self. Here’s how to rock your decision making process.  

Goals are more likely to be achieved when you write them down

Start by writing down all your goals.  Go big and give yourself plenty of time for an open brainstorming session. Think about things you’d like to see in the short-term, think about things you’d like in the long term.  Put down the things you think you’ll never achieve, but would like to.  I call these “dream big” goals.  And think about what your life would be like if you achieved them.  If nothing comes to mind right away, you can also ask yourself this simple question to get started:

“Imagine yourself three years from now, what would’ve happened between now and then for you to feel happy about your progress?”    

You can specify professional, personal, and financial goals, or all three.  Hopefully that spurs you to get at least a few things listed.  

Once you write them down, get specific

For all the goals dealing with finances, get more specific with them. Put a dollar amount on each one.  That will help inform the priority and the timeline for making your goals happen.  Your goals need to be actionable, or you’ll never achieve them.

If you don’t already have an emergency buffer, add that to your list.  Target one month to start, and prop it up to 6 months worth of basic expenses over time.  

If you have high interest rate debts like credit card debt, add that to your list.  Get it paid down as quickly as possible.  Carrying debt on the credit card is NEVER worth the rewards points!  

Execute by adding new savings for each priority

Once these are out of the way, then you can begin adding funds toward your savings goals.  If you have some long-term goals that are more than 3-5 years in the future, consider investing as an option.  If you have short-term goals, set up a high-yield savings account and some sub accounts to earmark funds specifically for each goal.  You can specify the amount more easily once you’ve done the work to write down and prioritize your goals.  If after you’ve done this work you still want to run out and buy some new-fangled fashion piece or electronics with your refund, by all means, do it.  That probably means it’s a really high priority for you.  For most of us, though, I bet we probably have bigger items on our list.  A trip, a house down payment, kids college fund, etc.

By now, it should be pretty clear that priorities and goals are going to be different for everyone. There’s no right path to take because it all depends on you.   To help with prioritization, you can get creative with it and associate each goal with a picture or a vision board to make it more tangible (there are most certainly apps for this). Explore creating a spreadsheet or drawing a picture to show your progress visually. There are endless options here, but the important thing is, if you measure it, it tends to get done!  

Knowing what you know now, what do you plan to do with your refund this year?

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