If you are getting a tax refund this year, it may feel like a huge windfall. If you use it to pay off debt or set yourself up in a new home that is sober and safe or otherwise use it to enhance your stability in recovery, it can be a great thing. But if you are like many in recovery who find that access to a large chunk of cash is a trigger for relapse, a large unexpected check for any reason is cause for concern.
Here is what you need to know to help you to manage your tax refund this year without a relapse:
- Plan for it. Once you have done your taxes, you know how much to expect in your refund from both state and federal. In most cases, it will take anywhere from a couple of weeks to a couple months before you have the money in hand. Use this time to consider the different options you have to make the most out of the money before it arrives so you have a plan in place.
- Talk to your therapist. In recovery, it is always a good idea to work with a substance abuse treatment specialist to manage all the challenges you face in your new sober life, and your finances are no different. In fact, money is one of the most common concerns in early recovery. Everyone needs funds to pay off debt, pay for treatment, and begin to build a new sober life. If you are talking to your therapist about your sobriety, then they will likely have some positive guidance to help you choose wisely when it comes to making your tax refund work for you in the context of your financial situation and recovery.
- Make a budget. If you can track where your money is going and know exactly how much you have coming in, you can better direct your finances and the question of what to do with any unexpected cash, including a tax refund, will naturally follow. Do you have more month than money and need help paying bills? A budget will help you figure out what needs to be cut and encourage you to make the changes that will increase your income to help you make ends meet. Do you have a little extra each month that you need to direct toward a specific financial goal like moving, paying off court fees, etc.? A tax refund will help you more quickly move toward that goal so you can move on to the next one.
- Planning for an emergency. If you are in the lucky position of having no debt, few bills, or a job that pays well enough to easily cover your costs, then a tax refund will help you to set up an emergency fund to protect you in the event of an emergency. No matter how solid your current financial situation may feel, there are always unknowns that can arise. It is a good idea to have an emergency fund on hand, but if ready access to a large amount of cash means that you define the opportunity to relapse as an “emergency” and cash out, then it’s time to up your accountability level by having someone you trust hold the money for you or investing it in a way that makes it hard for you to quickly access or requires a second signature.
When Cravings Creep In
Even with the best of intentions and well-laid plans, cravings can feel overwhelming. If you have money in the bank or a check arrives in the mail at the wrong time, it can culminate in the perfect storm and relapse can occur.
What did you learn about your finances by filing taxes this year? What changes will you make as you make your life stronger in recovery?