Conquering the Fear of Filing Taxes: Strategies to Beat Procrastination
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We've all been there - staring at that mountain of tax documents, feeling like it's an insurmountable task. But why do some of us wait until the last minute to file our returns? And how can we conquer our inner resistance? Let's dive into some tips to help you tackle procrastination and get ahead of your taxes.
We chatted with behavioral economist and author Thomas Mathar to get his take on the matter.
Why are some taxpayers late in filing their returns?
Thomas Mathar: People tend to avoid unpleasant or complex tasks, and filing taxes fits right in there. From an economic standpoint, it's smart to file early and potentially receive a refund. However, from a behavioral perspective, the complexity of the tax system can be daunting, there's no immediate reward, no social pressure, and most importantly, there's no urgency until the deadline looms.
So, where does the fear of filing taxes come from, and how can we address it?
The fear is often rooted in past experiences or false assumptions, but a new perspective can help. Instead of viewing tax filing as a daunting chore, try to see it as an annual financial check-up - an opportunity to gain more control over your financial situation.
How can we concretely manage to get the unpleasant bureaucracy out of the way earlier in the year?
One way is to employ various motivational strategies - for example, linking the creation of the tax return to a pleasurable activity, like enjoying a slice of cake you've been craving. Or reward yourself with a break after each completed section. You can also divide the task into smaller steps, start by collecting documents, and create a schedule with specific deadlines for each step.
It can also be helpful to make an appointment with a friend or partner and set the goal of sitting down together for an hour. It's inspiring to know that many people in your circle have already filed their tax returns, and as social beings, we naturally strive to follow social norms.
For those who prefer a more structured approach, consider leveraging technology - use accounting apps and automated bookkeeping tools to simplify the tax tracking and filing processes. Attend tax seminars or workshops to better understand tax laws and planning strategies. And remember, seeking professional guidance from a tax advisor or accountant can help reduce anxiety and ensure compliance.
By taking a proactive approach and implementing these strategies, you can transform your tax filing experience from a source of stress to a manageable task that supports your long-term financial stability.
About the author: Dr. Thomas Mathar heads the Center for Behavioral Research at Aegon UK, a British provider of investment and financial services. He has been studying the instincts, motivations, abilities, and environmental factors that drive or hinder people from making better financial decisions in the long run.
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Enrichment insights:
- Understanding the psychological factors at play is crucial to addressing tax procrastination: loss aversion and risk aversion play a role, and implementing behavioral nudges like reminders or peer review systems can encourage timely filing.
- Strategies to overcome procrastination include education and training, breaking the task into smaller steps, seeking professional guidance, creating a reward system, and shifting one's perspective on tax planning.
- To diminish the aversion towards filing taxes, one might consider viewing it as an annual personal-finance check-up, a means to gain control over one's financial situation.
- Employing motivational strategies, such as linking the creation of the tax return to a pleasurable activity or rewarding oneself after each completed section, can help beat procrastination when it comes to dealing with taxes.
- Attending vocational training workshops or seminars to understand tax laws and planning strategies can further empower individuals in their approach to handling their taxes and personal finance.
- Seeking support from a community, such as participating in taxpayer associations or forming study groups with friends, can foster a sense of accountability and foster a stronger business acumen in managing one's taxes and financial affairs.
