Being Wise with Your Windfall: Tips for Using Your Tax Refund

coins-currency-investment-insuranceIf you’re expecting a hefty tax refund this year, you may, like many people, intend to have some fun with your windfall. After all, it’s your money and you worked hard for it. There’s nothing wrong with heading out for some much-needed vacation time or buying a big gas grill for those summer cookouts. As tempting as that may sound, before you buy anything, consider the benefits of using a tax refund to better your financial situation.

Savings

If you’re among the many Americans who lack a rainy-day fund, think about setting all or part of your refund aside in an interest-bearing savings account. You never know when the transmission in your car may give out or an aging roof might start to leak. These are costly repairs, and the average American is unprepared for them; in fact, just 39 percent of Americans are capable of covering an emergency costing $1,000 or more. If you lack at least three months worth of emergency savings, that tax refund may serve you better as an emergency financial reserve.

If your roof could use some work, repairing it is an excellent use for a tax refund. You’ll head off more serious problems resulting from neglect somewhere down the line. But be diligent in looking for a qualified roofing contractor, and ask yourself several questions to determine what, exactly, you need. Check with the Better Business Bureau to make sure your contractor is accredited, and check out the BBB website for complaints or any disputes or scams a company may have been involved in, as well as tips regarding what to look out for.

Pay Down Debt

Debt is a fact of life for most Americans. If you struggle with credit card debt or are behind on the mortgage, your refund can help you out. Paying off debt is a smart move because the high-interest merry-go-round can be very hard to get off when you’re just managing it by paying the minimum every month. That can take you years to pay off even a moderate amount.

College Savings

According to CNN Money, most Americans can expect to pay about $57,000 for a degree at a public college, and more than $100,000 at a private institution. That’s a lot of money for anyone. Why not use your refund to open a 529 or Coverdell education savings account? And investing in your state’s 529 plan may result in a nice state income tax deduction. However, beware of using the money for unqualified purposes, which can earn you a 10 percent penalty.

Roth IRA

A Roth IRA lets you stash money away that becomes tax-free after age 59.5 as long as it’s been open for at least five years. You can contribute to it as you wish and withdraw the sum of your contributions without being hit with a tax or penalty. Your Roth earnings can be used tax-free for education expenses or for a first-time home purchase.

Invest in Yourself

You are your own most valuable resource, your best hope for earning and growing your assets. Improve your ability to do that by investing in training, additional education, or by joining a professional association. It’s a good way to sharpen your skill set, pick up new knowledge, and make valuable new professional connections. The more you can improve yourself, the more valuable you’ll be to an employer or to clients.

Travel

Speaking of self-improvement, are you aware that travel broadens perspective and helps you keep problems, challenges, failures, and successes in their proper context? Think about spending a portion of your refund to go someplace new, a destination that’s always interested you.

Think of a tax refund as an opportunity, an annual chance to improve your financial situation and personal prospects. Think carefully before heading off to the Jacuzzi store or ordering a season football ticket package. By being strategic with your financial prospects, you can put yourself in a much better position to acquire those “toys” you really want and achieve financial security.

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How to Start a Small Business When You’re a Parent with a Disability

Woman Coffee ShopImage courtesy of Pixabay

Are you ready to jump into a new venture? Being a parent is serious business in and of itself, but when you’re a mom or dad with a disability, getting a small business up and running can be a daunting task. Here is how to set yourself up for success.

 

Flexibility and Balance

 

Parenting is a demanding job, and parents with disabilities face unique challenges. How do you balance your career, your home life, and tending your personal needs in a way that is both satisfying and responsible? Being a small business owner can be the perfect solution. As The New York Times points out, becoming an entrepreneur allows people with disabilities to find independence, income, and flexibility. You can even work from home! As Angie’s List notes, though, you’ll need to make sure your home office is set up for “maximum productivity.” The site suggests eliminating distractions as much as possible (don’t put your desk in the kids’ playroom), illuminating it with natural light, and keeping ergonomic design in mind when selecting furniture. Be sure you choose pieces that accommodate your disability and will keep you comfortable throughout the workday.

 

Through owning your own business, you can achieve your financial and professional goals while scheduling comfortably around your capabilities, your family, personal needs, and other obligations.

 

What’s Your Niche?

 

The first thing you need to do is come up with the right business idea for you. Make sure to research trends and which startup ideas have the potential to make money.

 

Sometimes, great ideas pop into our minds without effort, and some are birthed through a process of sifting, sorting, and conceptualizing. If you aren’t sure of your direction, one suggestion is to look at your strengths, weaknesses, and lifestyle, and then start from there. Perhaps you can identify an issue your business can solve or a service you can provide. Make some notes to see if you find a trend. Then, narrow down your ideas until you find that happy place where there are customers AND a service or product you’d like to produce. That’s called your niche.

 

Do Some Brainstorming

 

Once you solidify the direction for your new venture, you can lay some groundwork. Starting your own small business is easier than it sounds. One of the first things you need to do is choose a name for your new venture. Many people get bogged down selecting a business name, but Inc. points out your time is better spent making money, so pick a name and jump in!  Some experts suggest thinking in terms of something that tells people what you do, which will make your brand readily recognizable. Some experts suggest you use a business-naming tool. A well-chosen brand gives your business credibility and provides an emotional connection with your target audience. It gives your customers and employees something to believe in and generates loyalty.

 

Connect with the Government

 

Once you decide on a name, you may need to connect with the government. If you will employ other people or will partner with someone else, you will need an Employee Identification Number (EIN). Some locations also require you to register your business name, and some require a business license. Check in with your county or city government for guidelines.

 

Evaluate Your Finances

 

As they say, it takes money to make money. You need to take a realistic look at your financial situation to see if you have enough funds or if you will need to apply for loans or grants for your new venture. Some professionals recommend overestimating your need, since many new businesses run out of funding before they can start turning a profit. A small business loan is a practical solution, and there are some wonderful grants and funding opportunities from various organizations specifically oriented toward people with disabilities.

 

Independence Can Be Yours!

 

Starting a new business can be the effective and smart solution for parents with disabilities, so lay a great foundation to ensure your success. Through your own business venture, you can pursue flexibility and independence for a balanced and fulfilling life. If you’re doubting yourself, go here and be inspired! There’s a vibrant, passionate community waiting for you with open arms.