If you’re expecting a tax refund this year, now is the time to start planning where the money is going to go. Instead of treating this money like it’s a gift from the government (hint: it’s not), give this money purpose by investing in things that will give you a positive return value.
- Pay Off Your Debt
This is possibly the least exciting option, but it is definitely the one that will put you in the best spot financially when done correctly. If you’re feeling shackled by your debt (especially your high-interest debt), consider taking your tax refund and putting it into paying off this burden.
Other than being great for your future financially, using your tax refund to pay off your debt has the possibility of increasing your credit score – a great added bonus that we would all love to have.
2. Spend it on Something You Need
Is your car slowly starting to break down? Have you forgotten to go to the doctor in 6 years? Consider using your tax return to pay for something you truly need to get done this year to take care of the essentials that you have been putting off for some time now.
3. Invest in Yourself
Taking some time and money to put back into your own well-being is something that we typically do not do often enough. Be sure to take care of your health this year by signing up for a gym membership, finding a mattress that isn’t a hand-me-down from your great grandmother’s house, or even getting a massage (or 5!). A little bit of self-care can go a long way, especially in today’s all-work-no-play environment.
4. Invest in Your Home
Take a good look at the value of your home. Do you have projects that you started two years ago and never finished? What about renovations that you’ve always dreamed of completing but have never even gotten quoted on? Tax season is a great time of the year to evaluate where you home could use some improvements, not only to make you feel happier and more comfortable in it, but to also increase its long-term value.
5. Fund a Roth IRA
Investing in a Roth IRA is a great way to find financial stability for your future-self. Roth IRAs act very similarly to regular investment funds, but they grow tax free and are basically retirement accounts that you can fund with after-tax money.
6. Spend it on Something You Want
You’ve been saving all year, but it’s hard to not feel guilty when we splurge a little bit. If you feel you have been working hard and deserve a nice vacation or a long weekend to the coast, don’t be afraid to take it! Remember – you earned this splurge.
7. Donate to Charity
A great way to spend your tax refund is by giving to those who are less fortunate. By donating to a charity that is close to your heart, you can feel good about where the money is going while also giving yourself the opportunity for larger deductions in the following year.
Sharing your wealth with those that are less fortunate is an important aspect of good money management and can improve the lives of numerous individuals – which can feel just as great as investing in yourself and your own financials.