If you are one of the many Americans whose savings plan has been impacted by a smaller-than-expected tax refund this year, it might be a good time to consider changing your financial planning approach.

Lots of people consider the tax return windfall they get every spring as an unofficial savings bonus. In reality, it’s a poor way to save money. The government ends up having your money until you file your taxes. That money does nothing for you while the government holds it. It’s not earning any interest, and it’s not being used to invest in any kind of growth fund.

A more sustainable plan is to make a better estimate of your tax withdrawals so you can retain control of that extra money. You can decide how to invest it so you earn money. Even if you are only earning a small amount, the funds are gaining something they otherwise would not.

Whether you are a new employee just signing up for your withholding or a long-term employee ready to make a change, it only takes filling out one form, the Employee’s Witholding Allowance Certificate or W-4, to change your withdrawal amounts. If you are unsure of how many deductions to claim, you have lots of options to learn about how to handle your money.

Organizations like the National Association of Personal Financial Advisors offer consumers resources to help find what they need. You might just need some advice on how to use your money wisely instead of getting a lump-sum tax refund. Or maybe you’d like to know your options on how to do that and also use your latest pay raise to start or add to a retirement plan. Often a fee-only advisor, who will not earn any commission on products or services, will discuss the best options for your personal situation.

The Financial Insdustry Regulatory Authority website contains valuable information about investing, understanding certain financial brokerage processes, and the difference between financial products and professionals. Websites like The Motley Fool, Kiplinger, or Bankrate give both novice and advanced consumers information they can use. Whether you need information on multiplying your savings for retirement, figuring out how much you can afford for a mortgage, or consolidating your credit card debt, you can get reliable, accurate information if you know where to look.

Once you are armed with information, you can decide if hiring a professional is your next best step. Generally a few hours with a fee-only advisor will pay for itself several times over. They can help you save thousands of dollars while also showing you how to take steps to grow your money, too.

While that boost of cash at the end of tax season is welcome, with a little planning, you can make it even better. And the more control you have over your own money, the better off you will be.

Julia Quinn-Szcesuil

Julia Quinn-Szcesuil is a freelance writer based in Bolton, Massachusetts.
Julia Quinn-Szcesuil

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