For many people, making ends meet throughout the year is tough, and saving regularly may seem unrealistic. In 2019, around 72% of Americans received a refund on their taxes. This extra jolt of cash can be a perfect opportunity to start-or increase-your emergency savings funds.
Saving throughout the year can be a challenge. You may feel like every paycheck is spent before you get it, or you might not have access to an easy way to save, like a separate account.
A tax refund may be the single biggest lump sum you will receive all year. You can take advantage of tax time to prepare yourself for unexpected emergencies, or plan for the future.
In addition to a resource library to assist you with taking advantage of the tax season to start your emergency fund or to build your nest egg, the Consumer Protection Finance Bureau has some steps you can take to save at tax time:
* Plan in advance to save part of your tax refund. It’s likely that you already have plans for what to do with your refund-many people do. If you can include saving part of your refund, maybe 25%, it could help you down the road when an emergency occurs, or you need extra cash to meet a financial goal.
* Have a separate account you use to save. There are many options to choose from, including a regular savings account with a bank or credit union, a savings bond, or a savings wallet on a prepaid card. Review your options and choose the most convenient way to set aside your savings. Then, set it up in advance so you are ready to use it during tax time.
* Automatically deposit some of your refund into a separate account when you file your return. If you’re receiving a refund, use your tax form to tell the IRS to put the part you need right away into your checking account and the rest into your separate account designated for savings. Don’t forget to have your savings account information with you if you visit a tax preparer or free tax preparation site.
To help you obtain financial security, the Employee Assistance Program (EAP) financial services program can provide Financial Consultants to assist you with your financial questions. Services include help with budgeting, credit/debt, education funding, retirement planning, and investment strategies.
EAP is a voluntary and confidential employee benefit available to federal employees and their family members at no cost. For more information, contact your Component EAP, or send an email to worklife@hq.dhs.gov.
Source: Department of Homeland Security, Science and Technology Directorate