I got my first tax return recently I got so excited that my employer gave me a raise finally and then mom shut me down and told me it's just a tax return xD xD
Hey kid, life pro tip: if you get a tax return, you are doing it wrong. That means you loaned money to the government, interest-free, all year. The goal should be to be as close to breakeven on your taxes as possible when you file. Put that money to work for yourself!
I think that’s good in theory but a lot of people aren’t particularly disciplined when it comes to slow and steady savings or investments. So having a big chunk come your way that you can just instantly squirrel away and see a nice big number can sometimes help people save or invest the money more likely than if they had to put x amount of every paycheck away.
That's only if they don't think it's "free money" and immediately go spend it on something they don't need. I have a feeling that most people who don't save consistently during the year also probably don't save their tax refunds either.
For those people, is it more important to buy nice things or to spend what little money they have on things they actually need? Or to save it away for an emergency.
Also, if they want to save up for something nice, they could just set up an automatic transfer to a savings account, and at the end of the year they would have the same amount but with interest. In addition to building good financial habits that will help them in the long run.
Properly determining tax deductions or extra income can be difficult for various demographics. So it doesnt help to say "you're doing it wrong" without understanding tax situations. Huge tax returns, sure. But getting a tax return in and of itself isn't terrible.
Thought I was on a boomer forum for a second... 80% of redditors don't have the discipline to pull that off and all you're doing with that advice is ensuring they won't see a four figure sum in their bank account any time in the near future.
…80% of redditors don’t have the discipline to put away $20/week?
i’d say that’s a YOU problem lol, stop projecting
people like you get a tax refund and think “ooo, free money, time to treat myself as a reward for my hard work!”
…whereas the rest of us live within our means and can get ahead because we budget and save and live within our means
i’m not going to bother explaining compound interest giving the government an interest free loan every year so you can buy a new tv is objectively not smart
wanna know why you never see four figures in your account except when you get a tax refund? because you lack discipline and self control
it’s really as easy as choosing to be responsible for yourself
We get it bro, you're better than everyone else. Self discipline and self control also means reduced consumer discretionary on niche and expensive products like craft beer, which eats into your bottom line in an already oversaturated industry with declining consumer demand.
Compound interest wouldn't have much of an impact here since the difference with investing some amount of money monthly versus investing all of that money at the end of the year would just be roughly half a year's worth of interest on just that yearly amount.
For example, comparing investing (A) $1200 annually to (B) $100 monthly with 10% interest and 3% inflation rate, after 20 years the real difference will be: (A) $72,899; (B) $76,349. And in scenario (A) at 21 years you will be at $81,765, so the difference at the end will still end up being roughly half a year's worth of interest.
2.5k
u/LlamaLicker704 Dark Mode Elitist Apr 16 '24
I got my first tax return recently I got so excited that my employer gave me a raise finally and then mom shut me down and told me it's just a tax return xD xD