Some of us think of our tax refund as “free money” and tend to spend it wants, not needs, like vacations, new gadgets, clothing, entertainment, etc. Putting this money toward something you have wanted for a long time, but have been unable to afford, is alright. However, you can also consider using this money as an investment and spend it in a smarter way that will benefit you more in the long run.
Here are 5 ways to get started:
1. Eliminate Debt
If you owe anything on your credit card(s), use all, or a good portion of your refund to pay it down. If your credit card is paid for, you can put this money toward other bills or expenses you may have like your mortgage. Reducing debt lowers your monthly expenses and boosts your credit score.
2. Put it Away
With the economy the way it is these days, financial stability is not necessarily guaranteed. Put your money into an emergency savings fund for a rainy day or continue saving for retirement.
3. Invest in You
Why invest in others when you can invest in your self. Take time to get additional education and certifications in your field. Use your tax refund to pay for tuition. Alternatively, you can take the money to make a more personal investment by hiring a personal trainer or joining a high-end gym.
4. Fix your House
Invest in energy efficient upgrades for your home. Installing solar panels (with a larger tax refund) or switching out all your light bulbs to more efficient LED lights (with a smaller tax refund) will be a cost savings by cutting your monthly energy bill down.
Invest in someone else’s future. If you have grandchildren help them out by paying for part of their college tuition. Want a tax deduction? Find a charity that you are passionate about and make a donation.
However you choose to spend, or not spend your tax refund, it’s always nice to have a little extra cash on hand.