view tax refundNow that we’re getting into the tail end of tax season, it’s a good time to think about how you view your tax refund. The way you think of your tax refund can make a big difference in the way you spend it.

According to a recent survey from Capital One, only 12% of respondents think that their tax refund is free money that they can splurge with. This is actually somewhat encouraging because the reality is that in most cases your tax refund is money that you have overpaid to the government, so you have been basically providing an interest-free loan.

The Problem with Viewing Your Tax Refund as a Windfall

One of the reasons that you don’t want to consider your tax refund as a windfall is the way that many people use unexpected money. Many of us, when we get an unexpected windfall, view it as play money that we can use to do something fun. This means that it is often spent on something that we don’t really need and possibly don’t even really want for the long term.

The other problem with this mentality is, of course, the fact that your tax refund isn’t actually a windfall. It’s more like a forced savings plan because you have sent the money to the government, even though you didn’t need to send as much as you did. it’s money that you have already earned and that you should already have in your account, not a windfall.

Using Your Tax Refund for Other Things

Instead of treating your tax refund as though it is a windfall, recognize that it is more like a forced savings plan and that you should use it on something else. Think about what you might be able to use the money for to help you get ahead financially. This might mean paying down debt or buying something that you have been meaning to purchase for a long time. You can also use your tax refund to help you pay bills and get ahead with your money and general.

Many Americans are open to the idea of using a tax refund for things that they need. The Capital One survey indicates that about 61% of respondents would rather spend the tax refund now on something they need instead of saving it for something they want later. Deciding to get a better handle on your financial future with the help of your tax refund can be a smart move.

Forced savings can work well for you if you know that you will have a hard time setting money aside for specific goal. Using the money that your employer takes out for taxes as a way to force yourself to save for a vacation or other major purchase can be one way to ensure that you are saving like you should be.

Pay attention to the way that you handle things. I think about how your tax refund fit into that. Then, you can make a plan for your tax refund based on your own money habits.