Are you spending your tax return before it even hits your account? You’re not alone. In this episode, I’m talking about the cycle that keeps you stuck—thinking your tax return will save you, but it disappears before you even get it. I’ve been there and am here to show you how to transform your money habits so you feel financially secure without relying on tax return season to bail you out.
I share a three-part exercise to help you leverage your tax return to hit your financial goals. This process isn’t about restriction or paying down debt as quickly as possible. I want you to spend your money on what you want by building a sustainable money management process that works for you every month, not just during tax season.
If you’re tired of feeling like you’re starting over every time you get extra money, this episode is for you. Listen in to find out how to stop relying on big lump sums and start managing your money with confidence.
Learn how to break free from the tax return cycle…
- [01:40] Are you stuck in the tax return cycle?
- [07:02] 3-part exercise to plan how you will spend your tax return
- [15:20] Building sustainable money habits
Tune into this episode of Money Files to learn how to stop relying on your tax return and start leveraging sustainable money habits to regain control of your finances.
Are you ready to start asking for help with your finances? Apply to work with me, and let’s start working towards your financial goals.
If you loved the discussion about spending your tax return, check out my episode, Ditch the Fake Math: How Your Spending Habits Impact Your Budget!
Transcript for “How to Stop Relying on Tax Season for Financial Security”
Intro: Hi and welcome to Money Files. I’m Keina Newell from Wealth Over Now. I work everyday with professional women and solopreneurs to help them get out of financial overwhelm and shame so they can experience more flexibility and ease with their finances. Are you ready to gain confidence and learn to manage your finances intentionally? Tune in and grab financial tips that will help you master the way you think about and manage your finances.
Keina: Hello, and welcome back to another episode of Money Files. So I want to talk to you today about something that is probably very top of mind. You might already have it in your possession, and that is your tax return. I feel like this time of year, there are a lot of clients and a lot of listeners like yourself that are thinking, ooh, my tax return is here and you have already made plans for your tax return. And if you’re also like myself in the past or like my clients, you’ve also already spent your tax return five or six times. You spent it in your head. You may have already made some purchases preemptive of the fact that your tax return is coming in. You’re like, oh, my tax return is coming. I can go ahead and book that trip. My tax return is coming, I can go ahead and get that new pair of shoes.
And you have also probably told yourself, I’m going to use my tax return to save some money. I’m going to use my tax return to pay some debt. And so when I talk about already using your tax return, 5, 6, 7, 8, 10, 11 times, that’s exactly what I mean is that you have allocated it in your head mentally, but you’ve allocated it multiple times. What I call hoeing your dollars out. And so that right there is the cycle, the very, very cycle that’s keeping you stuck because it’s another version of fake math, right? You think that you have this influx of money coming in and so you basically spend it before it’s even in your possession. And then by the time it gets to you, you don’t actually feel anything. It’s already gone. And I know about this cycle because it was me. I would get a $2,000, $3,000 tax return and immediately think about like, oh, okay, I can pay off some of my credit card debt and if I had a really big tax return, oh, you better believe I was like rich, rich.
So I even had bigger plans and it was when I noticed my cycle of, I expect my tax return every single year to save me. Like that was my primary plan for being able to pay off debt. It was my primary plan to say that I could save a little bit of money. And it just isn’t honest. And when I say it’s not honest, it’s keeping me in a cycle. It kept me in a cycle where I literally was expecting this check from the government to help me get ahead, to help me pay off my past mistakes. And we want to get out of that cycle because we want to be able to live without a tax return. We want to be able to live without a tax return, and we just want to get out of the cycle that we’re expecting a lump sum of money to save us. We want to be in a place where we’re able to manage the income that we have and be able to feel like we have something to show for our money.
And if we get a lump sum of money, then great, we want to be able to to make clear decisions with that. So if we’re getting real for a second, this tax return feels like free money. And it’s a lump sum and maybe you’re not used to having that much money in your account at once. So it’s really, really easy to start making plans for it. But the reason so many people feel like their tax return disappears is because like I said, they spend it in their head multiple times before they ever actually have it in their possession. So you’re thinking about how to put it towards debt or how to take a trip or how to save it or how to catch up on bills or how to go to a concert.
But when that money actually comes in, where is it? Because your bank account, it just gets absorbed into that account. So that’s simply because you’re mentally spending money and it’s not the same as having an actual plan for it. So I want to actually tell you a story about my client, Allison. And last year she got a $14,000 tax refund and she was terrified that she was going to blow it because in the past her tax refunds always disappeared. But here’s what we also uncovered. It wasn’t just tax returns, it was any extra money that she got. If her husband got a bonus, the money disappeared. If she got a gift from family, it disappeared. If she did something like worked extra hours or offered something that brought her in extra money, that money also disappeared. And it wasn’t because she was irresponsible with money, it was because she didn’t trust herself to handle extra money. That’s why it disappeared.
There’s a place in which you don’t realize that you’re self-sabotaging, when you were like, oh my goodness, I had no idea what to do with extra money. And so it disappears because you just don’t trust yourself, but you may not notice that cycle. So when we worked together and she got this tax return, we made sure that we created a plan together. And for the first time, she was actually able to save some of it. She spent some money without guilt, and she used some money for things that actually improved her life. There were some home projects that they needed to do, but she was able to see like, I can take $14,000 and feel like I can be the person who is responsible managing a large sum of money. And this wasn’t just about for tax return, it was about breaking the cycle of uncertainty with money.
That’s what we did, when we were able to manage her tax return, we were able to break the cycle of uncertainty with her money. And I want that to be something that you are able to do as well because this time next year, if you in fact get a tax return, I want you to not have uncertainty about that money. If at some point this year you get a bonus, I want you to not have uncertainty. I want you to feel really certain about, yeah, I’m getting a $30,000 bonus. I know after taxes, this is how much it’s going to be and I’m going to have a real plan for it. So exercise I want to walk you through is something that you need to implement for yourself, especially if you’re thinking, yep, I do the same thing. Keina, maybe it’s not my tax return, maybe it’s my bonus, but how can I be thinking about my money? How can I be like Allison?
So the first thing I want you to do is I want you to write down every single thing you told yourself you were going to use your refund for or you can put bonus. And I want you to be honest, honesty is the best, best, best way to disrupt fake math because it’s the little things that you’re not honest about that are going to take the money because they’re sneaky. So just be honest, what did you say you were going to spend your money on? Then I want you to allow yourself to also be able to plan ahead. So I want you to look at the next 30, 60, 90 days, like do you have a big expense that’s coming up? Is there summer camp? Is there a trip? Are there car repairs? Are there annual fees that are coming up? What’s coming up for you when you think about the next 90 days, the next quarter?
And then I want you to use what I call the 50, 30, 20 shift to divide your money. So I want you to think about if I’m getting a $4,000 tax return, I am going to put $2,000 of that towards my financial stability. So I’m going to think about like savings, bills, upcoming expenses, how can $2,000 of that go towards my own financial stability? Then you can take 30% of that and you could use it for lifestyle spending. So maybe that’s fun. Maybe that’s travel, maybe that’s some upgrades in your life in terms of like things that you want to do around the house. And it may just be that you aren’t able to actually do the thing immediately, but you’re able to start saving for that, being able to plan ahead, like we said. And out of $4,000, that means you have $1,200 that would go towards your lifestyle, and then the 20% of it you could put towards financial growth.
So $800 you could put towards like debt payoff, you could put it towards investing. But the reason that I want you to think about it like this is because it also allows you to have a both and approach to things. And when I say a both and approach, is I am not someone who tells my clients, Hey, you need to put all of your money towards debt because here’s what happens, you’ve used your tax return in the past to pay off debt and then you’re right back into debt because you weren’t honest, which was the first step about how you wanted to spend the money and you didn’t look at what was actually coming up. So now you need some of that cash to be able to pay for the things that are coming up in the next 30, 60, 90 days.
And so we want to be really thoughtful and we want to be honest, you’re going to make more sustainable progress when you’re honest about what you want to do with your finances. And for me when I’m working with clients is I want you to have sustainability. I actually had a client call yesterday and my client, she has, I think she’s getting like a $3,000 tax return. We’ve been working together for a while and we’re going through this very exercise and I told her, okay, she actually made a list and she told me all the things that were coming up. She’s like, she has kids, she’s a single mom. So she was talking about spring break coming up, she listed one of her son’s birthdays, she listed some holidays. She actually went all the way out until the end of the year. And so what we’re going back in and doing is, okay, how much do we actually need for spring break?
You talked about your kids needing some clothes. How much do you think that they need for clothes? So we’re actually able to like fact check it. We’re using real math against her budget that we have in place. And so one of the things that we found, like we were looking at the holidays and I said, well, how much do you think you want to be able to spend for the holidays? And so I think it’s maybe like $1,200 she wants to spend for the holidays. Well, based off of the plan that we have and how she’s actually saving already, she’s going to have that money. So she doesn’t actually need to use her tax return to help her get ahead for holidays. Like we’re already on the mark with where we need to be. And so we went through her entire list and we were just looking for things to say where are we in relation to our goal?
So we also looked, her son has a birthday in October, we looked at that. She said that she wants to spend about $300 on her boys’ birthday parties, she’s going to have over $500 in her birthday fund by the time October comes. And so we don’t need to use some of her tax return for her holidays, or excuse me, for her birthdays because the savings plan we already have in place is going to take care of that. And so we are going through to see what is it that she needs to potentially use for like financial stability, maybe some places that she “wants to catch up on” just based off of kind of where we are in the cycle of when we started to save money or talking through what’s actually happening this summer. And so we’re going through this exercise and what she was saying to me is like, I feel like in the past I would put it towards debt because it feels like the adult thing to do.
And of course it does feel like the adult thing to do and we can still put some of that towards her debt. But I want to do it in what I call a sustainable way. And I want her to be able to balance this both and, where she has, okay, I am focused on my financial stability, I’m focused on my lifestyle spending and I’m also focused on my financial growth. Because if she is able to maintain this way of thinking and balance in her life, she’s going to be able to pay off the debt and stay out of debt because we’re learning to plan ahead while also thinking about how can I be responsible,” while also thinking about, Hey, how can I be honest about how I want to spend money. And so we’re giving a little bit of a balance to that. I always equate things to like fitness and nutrition because it’s something that I feel like I’m always thinking about and I think money and fitness parallel really well, but it’s similar to if you are someone who you want to lose weight and you’ve told yourself you can’t have any sweets, you could restrict and say, okay, great, I’m not going to eat any sweets.
When you are allowed to eat sweets again, you’re probably going to go crazy. And I think that’s the same way, if you’re like, I’m not allowed to spend any money, I can only put it towards debt, but then when you’re allowed to spend again, you’re going to binge spend and that’s not sustainable. I want to help you build something for yourself that is sustainable so that you can trust yourself to pay off debt, get out of the debt cycle and not get back into debt or if you do have some debt that you can trust, like, okay, I know exactly how to pay this off because that’s also going to keep you out of the shame cycles that happen when you’re thinking about, dang, like I paid off my debt and I’m right back in debt again. So I believe that it is better for you to pay off your debt in a slower, more sustainable fashion than it is for you to try to throw everything you have at your debt because it’s not realistic of how you want to live.
So going back to both my client that I was just telling you and my client, Allison, the transformation here is not with the tax refund. The transformation is thinking that you need a lump sum of money to get ahead. And so we’re able to shift that thinking when we’re using this 50, 30, 20 approach and you don’t need a tax return to get ahead. You don’t need a bonus to get ahead. You don’t need overtime paid to get ahead. What you need is a system that lets you have money for the things you want every single month. That’s what we want. Because the real reason you’re scared about your tax return disappearing is that you don’t trust yourself with extra money. But when you have a solid money plan, that fear goes away because you are allowing yourself to have money for the things that you want every single month.
So you’re not feeling like you are deprived, you’re not feeling like you’re restricted. And that’s what I want for you. And if this resonates with you, if you’re like, oh my goodness, Keina, you are reading me like a book. Apply to work with me in my five month coaching partnership, this isn’t just going to be about the tax return you get this year. This is going to be about every lump sum of money you get, whether it comes through a promotion, whether it comes with your parents may be giving you some money, maybe you inherit some money. I want you to feel really confident that, hey, I can get money and know how to manage it. I don’t have to have this fear that it’s going to go away. Like I can trust myself that I know the right thing to do with my finances because I know how to manage money for me and my life.
That’s what I want for you. So if that’s you, apply to work with me, you can go to my website, wealthovernow.com, or you can go to the show notes and you can book a call with me. And then lastly, what I want to talk about is should you even be getting a big tax return? Okay, so this is kind of like a side note, and I want you to check some of your beliefs about getting a tax return, because I want you to know that when you get a tax return, all you did was give the government a loan. So they’re giving you your money back that you paid already and they’ve been taking your money and they’ve been using it however they want to use it. And there was a point in my life where I definitely like loved getting a tax return because it was my savior.
Now I try to make sure that I get like a $0 tax return because I believe I can manage my money better than the government can and I can trust that I don’t need a tax return to save me. So I want you to ask yourself, would you rather have more money in your paycheck every month or do you want to keep waiting for one lump sum in April? And right now, if you are scared about managing a lump sum or scared about having extra money and having a lump sum, or like, oh, but Keina, what if I have to pay taxes? That’s just a matter of you need a system to better manage your money so that you can make it through any uncertainty when something happens with your finances. But I’ll let you answer that question for yourself.
But I do want you to know that if you’re thinking like but Keina no, I need my tax return or I don’t want to owe and you have a fear of that, it’s a matter of you having a system. So you don’t have to fear that. But the question is, would you rather have more money in your paycheck every month or keep waiting for this one lump sum in April, and is this refund actually helping you or just giving you temporary relief? Is that refund really propelling you forward or is it really just a bandaid for something else? Because the goal is to not rely on a tax refund and to feel financially stable, that means that you need financial stability every single month and you just don’t need financial stability because you got a lump sum of money. And if you know that your tax return always disappears and you want to break the cycle, not just for this year, but for good, this is exactly the kind of work that we do in my five month coaching partnerships.
I help clients create a money plan that doesn’t rely on tax refunds, bonuses or windfalls, and we disrupt fake math and actually trust ourselves with extra money. We also make sure that you have financial security not just in April, but every single month. So just imagine that this time next year, it’s 2026, which is crazy to say, you get a tax return, but you don’t need it to get caught up and you already have savings and you already have money set aside for the vacations you want to take this summer. You already made it through the holidays with no debt, you were able to pay for everything, and you’re not carrying extra debt and you actually get to enjoy your tax return and you get to enjoy your money without guilt, like that’s the shift that I want for you. So if you’re tired of feeling like you’re starting over every time you get extra money, let’s change that. Go to my show notes, apply to work with me for coaching, and let’s build a money plan that actually works for you, that actually aligns with the life that you have. So thank you so much for tuning in, and I look forward to talking with you next week. And if this episode impacted you, I would definitely also appreciate if you would either leave a review or share it with a friend. Thank you so much.
Outro: Thank you so much for listening to Money Files. If you’re ready to take the next step to reach your financial goals, head to www.wealthovernow.com/appointment and let’s get started.
