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Why do we love tax refunds so much?

Is it the thrill of seeing that lump sum hit our bank accounts? The relief of knowing that, finally, we can tackle that lingering credit card balance or book that long-overdue vacation? Or maybe it's just that sweet, sweet feeling of "found money."

But here's a question: Why are we celebrating getting back money that was ours all along?

Yeah. Ours.

Every year, millions of Americans eagerly await their tax refunds like kids waiting for Santa. But let's be real — that refund isn't the financial gift you think it is. It's actually a sign you've been playing the money game all wrong.

Let me tell you a story.

When I was fresh out of college, I was one of those people. You know the type — filing my taxes as soon as possible and just waiting for the refund to hit my account. When the money finally dropped, it was all high-fives and online shopping. It felt like a victory.

But was it?

One day, a friend — let's call him Frank, because every friend who delivers uncomfortable truths deserves a name — asked me a question that changed everything: "Why are you so excited about getting your own money back?"

At first, I brushed it off. "What do you mean? Everyone loves a tax refund!" I replied, thinking he was just being a financial buzzkill.

Frank wasn't having it.

"You just gave the government an interest-free loan," he said, leaning in. "And now you're celebrating? Mer, that's not smart — that's just bad planning."

Bad planning.Two words that slapped me harder than any credit card bill ever could.

I realized I had it all wrong. The refund wasn't a bonus or a win — it was a red flag. A sign that I'd been letting the government hang onto my money all year, without a cent of interest in return. And trust me, Uncle Sam didn't even say thank you.

So, here's the deal: Tax refunds? They're not the financial victory you've been led to believe. They're more like a wake-up call.

Today, I'll show you why it's time to stop cheering for that refund and start playing the money game on your own terms.

Because who wants to give away their hard-earned cash for free?

What Tax Refunds Really Represent

So, let's break this down. What exactly is a tax refund?

Some folks think of it as a bonus — like winning the financial lottery just for being a responsible adult and filing their taxes. But here's the truth: A tax refund is not a bonus, a gift, or a stroke of luck.

It's your money. Period.

Think about it. Throughout the year, every time you get paid, a chunk of your earnings is whisked away to the IRS before you even get a chance to say, "Hey, wait a minute!" That's your tax withholding, and it's supposed to cover the taxes you owe for the year. But if you're getting a refund, that means you overpaid.

Yep, you've been handing over extra cash to the government — interest-free — all year long.

Let that sink in for a moment.

This isn't a new concept. It's been happening for decades. In fact, the whole idea of a tax refund goes way back to the 1940s, during World War II. The government needed funds to support the war effort, so they started withholding taxes directly from paychecks. But the math wasn't perfect, and by the late '40s, they were giving back about $2 billion a year in refunds.

Fast forward to today, and we're still doing the same thing — only now, the average tax refund totals more than $3,000. That's three grand you could've had in your pocket all year, working for you, instead of sitting in Uncle Sam's account.

Ever wonder what the government does with that money while they're holding onto it? Spoiler alert: They're not sitting on it like a dragon hoarding gold. They're using it. It's funding everything from infrastructure to interest on the national debt.

But let's not get too deep into that rabbit hole. The point is, when you get that refund check, you're just getting back what was yours to begin with. No interest. No extra perks. Just your own money, handed back to you like the government is doing you a favor.

So, why are we still treating refunds like a financial win?

Maybe it's because we've been conditioned to expect them. Over the years, marketers and tax prep companies have turned refunds into something to be celebrated. You know those commercials with happy people dancing around, waving their refund checks? They make it seem like the ultimate reward.

But what if, instead of celebrating, we started thinking about how to keep more of that money in our own pocket? Imagine what you could do with an extra $250 a month — every month.

3 Reasons Why I Try to Avoid Tax Refunds

Here's the deal: Getting a refund might feel good, but it comes with some serious downsides. Let's start with the big one first — opportunity cost.

Opportunity cost is just a fancy way of saying that when you choose to do one thing with your money, you're missing out on the chance to do something else with it. And in the case of a tax refund, you're missing out on a lot.

Imagine this: Instead of overpaying your taxes all year, you keep that money in your own account. Every paycheck, a little more stays in your pocket. And what do you do with it? You invest it. Maybe it's a high-yield savings account, maybe it's your 401(k), or maybe you use it to pay down some high-interest debt.

Over the course of the year, that extra money could be earning interest, compounding, or just reducing the amount you owe on that credit card. But when you overpay your taxes, that money sits with the government, doing absolutely nothing for you.

And let's not forget about inflation. That's Reason No. 2.

Every year, the value of money decreases due to inflation. That means when you let the government hold onto your cash, you're essentially losing purchasing power. The money you get back in a refund isn't worth as much as it was when you first earned it. That's like paying a hidden tax on top of your taxes!

Now for the third reason I like to avoid refunds — the psychological impact.

I get it. Getting that big refund check feels like a windfall. It's like a mini lottery win that makes you want to splurge. New TV? Why not! Fancy dinner? Let's do it! But that's the trap.

Because we treat refunds like "found money," we often end up spending it impulsively, rather than using it strategically. And while there's nothing wrong with enjoying your hard-earned cash, there's a big difference between spending it wisely and blowing through it because it feels like a bonus.

It's all in your head.

Ever hear the term "mental accounting"? It's when you categorize money differently depending on where it comes from or what you plan to use it for. And a tax refund? That's prime mental accounting territory. We treat it like a separate pool of cash, detached from our regular income, which makes it easier to justify spending it recklessly.

But here's the truth — every dollar you get back in that refund could've been part of your financial strategy all year long. It could've been growing, earning, or paying down debt. Instead, it's handed back to you like a pat on the back, tempting you to spend rather than save or invest.

Now, there is one instance where this could be beneficial. Some people like the idea of getting a tax refund because it's a way of forcing themselves to save. One of my friends explained it like this: If given the option, he would rather have someone else hold onto his money because he knows he'll spend it if it's just sitting there in his account.

And hey, there's no shame in that. If you're someone who struggles with saving, a tax refund can be like a built-in savings plan that pays out every spring. It's not the most efficient way to save, but if it works for you, then maybe it's worth sticking with.

But here's a thought: What if you could take that same mentality and apply it to a more strategic savings approach?

Imagine setting up an automatic transfer from your checking account to a high-yield savings account every month. It's like getting your refund in smaller, more frequent doses — only this time, your money is earning interest instead of collecting dust in the government's vault.

If you find that a refund helps you stick to your savings plan or manage big expenses without going into debt, then maybe it's the right choice for you. But remember, it's still about making a conscious decision rather than just going with the flow.

Either way, it's time to rethink that refund. Because when you stop seeing it as a reward and start seeing it for what it really is — an interest-free loan to the government — you'll start making smarter choices with your money.

With a little planning and some strategic thinking, you can keep more of your money throughout the year and put it to work for you — whether that means investing, saving, or paying off debt.

Because at the end of the day, the goal isn't to get a big refund. The goal is to keep more of your money in your hands, where it belongs.