Some might wonder, why is Military Saves Week in late-February? Well, one of the reasons is because it is tax time. For many Americans, this presents an excellent time to talk about saving and to take action.
According to the IRS, in 2015, over 40 million Americans received tax refunds and the average tax refund was over $3,100. For servicemembers who have deployed to a tax-excluded zone for some time in 2016, they could see their 2017 tax return much higher than that. So, what should you do with all that money? You guessed it: Save it!
As a financial counselor, one of my favorite tips to share with individuals or couples who are expecting a tax return is the 1/3 1/3 1/3 rule. It gives you a little cash in your pocket as well as an opportunity to pay off some debt and tuck some money away for emergencies. Of course, you can change this ratio however you’d like, but you could jump-start an emergency fund with $1,000 and then keep up the momentum throughout the year.
How it works: Split Your Refund 1/3 1/3 1/3
1/3 going to purchase something
1/3 to pay off current debt you owe
1/3 to your savings account.
Bonus: you could win (101 prizes and a grand prize of $35,000) for saving a portion of your refund when you file your tax return and use Form 8888 (to split your return and put some of it directly into a savings account) with SaveYourRefund.org!
Saving at tax time – a great way to jump start your emergency fund! #MSW2017