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Financial coaches help people succeed in tax season

Janet Raffel, Senior Manager, Financial Capability | 4/3/2019 3:10:58 PM

Molly Barackman-Eder, Manager, Financial Capability

Many people want to manage their money better so they can fulfill their dreams such as buying a home, saving for a child’s education or becoming debt-free. With tax season upon us, working with a professional financial coach in addition to a tax preparer to plan ahead and get organized can make the process run smoothly and can mean the difference between falling into a “financial trap” or working smartly and reaching one’s financial goals. The benefits of working with a financial coach can last a lifetime.

A woman receives financial counseling at the NHS of Chicago NeighborWorks Homeownership CenterHow they can help? Creating a budget is critical to financial success all year. The importance of starting and sticking to a financial plan cannot be overstated, as many people are living paycheck to paycheck. As NeighborWorks America’s fifth annual consumer finance survey found, 43 percent of consumers only have enough savings to tide them over for a month, and 38 percent don’t have any savings that would allow them to respond to an unanticipated crisis – much less work toward a desired goal. Financial counseling helps individuals establish savings goals and stick to those goals so that they can improve their credit scores. People need help to create a budget, and many NeighborWorks organizations around the country offer financial coaching so people can learn how to set and reach goals, such as saving for retirement. NeighborWorks America created a video and infographic that explains what financial capability means and how it works.

Taxes can feel intimidating. A financial coach can help you find a reputable, free tax preparer through the Volunteer Income Tax Assistance (VITA) program, avoiding the cost of a paid preparer (as much as $250 for a simple return.) Financial coaches are experienced at helping families find out if they are eligible for income-based tax credits, including the Earned Income and Child Care Tax Credits, which can generate thousands in tax refunds. The filing forms, technical instructions from the IRS, and required documents from employers and others can be difficult to navigate.

On top of the paperwork, consumers have to pay attention to life changes that make each year’s filing a little different: new jobs, additional jobs, new mortgages, babies being born, new student loan interest payments, and more. Seeking out trained help, especially if it is available at little to no cost, can take the pressure off while establishing a solid foundation for meeting financial goals. In 2018 47 NeighborWorks organizations around the country offered tax preparation services, like the free VITA program, to 45,694 people. VITA offers quality, community-based services at no charge to help qualifying filers obtain the maximum tax credits allowable, along with quick access to their full refunds.

During tax season and beyond, NeighborWorks organizations offer consumers help and guidance in making important financial decisions. Consumers can take advantage of these services to create a financial plan and budget that uses tax refunds to achieve long term financial goals. Trained staff who can offer one-on-one support can reduce anxiety and extra costs during what can be a very stressful time.

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