April isn’t just about filing taxes—it’s also Financial Literacy Month, a perfect opportunity to reflect on your financial habits, expand your knowledge, and take meaningful steps toward improving your financial well-being. Whether building your first budget, preparing for retirement, or navigating the complexities of paying for college, financial literacy is the foundation for making confident, informed decisions.
It’s important to remember that financial literacy isn’t something you master once—it’s a lifelong journey of adapting, learning, and growing as your circumstances and goals evolve.
Here are some practical steps you can take today to strengthen your financial foundation:
Financial Literacy Lessons from Tax Season—Turning Insights into Action
Tax season may not be anyone’s favorite time of year, but it does have a way of sharpening our focus on finances and decisions over the past year. It’s also an opportunity to reflect and identify changes that could improve your financial literacy—and potentially your tax outcomes—for the year ahead.
Reflect on Your Tax Return: As you gather your records to share with your tax professional, it’s a good time to identify patterns in your income, expenses, and deductions. Determining how much is coming in vs. how much is going out is the first step in creating a realistic budget.
Spotting overspending or missed opportunities may help you modify your behavior and adopt better financial habits that could benefit your financial health in the long term. It’s also worth reviewing your tax withholdings to see if they align with your current situation.
Common Gaps in Record Keeping: If tax time is always a last-minute scramble for documents, receipts, and other paperwork, learn from this year’s experience and commit to being better prepared for next year.
A good tax document organization system can help you track income, deductions, and expenses year-round. Being organized can make it easier to calculate taxes accurately, claim deductions, and make smart financial choices.1
Having disorganized tax documents can result in issues like late filings, missed deductions, and lost records. Missing deadlines could mean extra fees. Overlooking deductions could result in missed opportunities. And lost records could have multiple negative ramifications.
For physical paperwork, consider setting up folders or binders for different types of documents. Think of separate folders for personal bank statements, medical records, and investment statements. Arrange papers in chronological order or by categories inside these folders so you can easily find them. Label folders clearly and keep them in a filing cabinet or a fireproof box.1
In today’s world, you may want to go digital. Many financial institutions send tax documents electronically. Download them and save them to a digital folder. For physical documents, scan them and save them to the same folder. Arrange these digital files in folders and sub-folders on your computer or an external hard drive—just like you would with paper copies.
Many financial professionals offer clients access to a secure digital vault. These tools help you store and organize your financial documents so they are accessible when needed. Whichever method you choose, regularly backing up your digital files can help avoid any potential data loss. These record-keeping ideas are not a replacement for real-life advice. We would encourage you to speak with your tax, legal, and accounting professionals before modifying your record-keeping strategy.
Using Your Tax Refunds: According to IRS data from February 2024, the average tax refund amount was $1,395 in 2024, down nearly 29% from $1,963 the previous year.2 Of course, this is just an average, and your refund might be higher, lower, or non-existent if you owe the government money.
If you receive a tax refund, here are a few ways you may want to put it to use:
Build Your Emergency Fund
An emergency fund is one way to help manage unexpected expenses or layoffs. If you can’t put away three to six months of expenses in your savings with your regular paychecks, your tax refund can be used to boost that number.
Pay Down High-Interest Debt
If you carry a balance on credit cards or other high-interest debt, consider paying down that balance and free up your budget.
Tackle Maintenance Costs You’ve Been Postponing
Have you postponed car issues, appliance problems, or home repairs because of the costs? Consider using extra cash from a refund to address these needs before they get worse and potentially more expensive to fix later.
Better Yourself
You could use your tax refund to invest in yourself. Ideas could include taking a course at a local college, getting a certification that could improve your job prospects, or finally starting that side hustle you’ve been thinking about.
Invest Extra Cash
If you receive a larger refund, you may want to work with your financial professional to invest that money.
Working with a Financial Professional
Taking control of your finances can feel overwhelming, but small, consistent steps can make a big difference over time. Whether you’re organizing your financial documents, learning more about budgeting, preparing for major life events, or reviewing your long-term financial goals, each action strengthens your financial foundation and can build your confidence.
When you’re ready to take the next step in your financial literacy journey, we’re here to guide you. From helping you create a comprehensive financial strategy to helping you leverage tools like secure digital vaults or educational resources, we’re committed to empowering you with the knowledge and strategies you need to pursue your goals. Financial literacy isn’t just about knowledge—it’s about having the proper support to make informed decisions for your financial future. Contact us today and let us help you turn your goals into a strategy!
Sources:
- DataSnipper, August 25, 2023: https://www.datasnipper.com/resources/how-to-organize-tax-documents
- IRS, February 2, 2024: https://www.irs.gov/newsroom/filing-season-statistics-for-week-ending-feb-2-2024