Local taxpayers seem to forget that their tax refund is money that should have been theirs all along. Unless you already have made your decision on what to do with or how to spend your tax refund, here are some useful tips:
1. Start or increase your emergency fund
If you haven’t created one, you should. If you already have emergency savings, it’s good to keep it updated and increase it whenever you can. Without having an emergency savings account, an unexpected major expense can put you into debt and create financial problems.
2. Pay off debt
Reducing the amount of your debt, especially high-interest debt, will take some weight off your shoulders. It is highly encouraged to start paying off student loans, car loans, credit card debt, home loans, etc. before things get worse and you are swamped with debt to pay off.
3. Kick start to your business
Want to start up your own business and didn’t have enough funds? Or you want to take your business to the next level? Here is the perfect chance. You can use your tax refund to help make this move possible and take it in the right direction.
4. Invest in your future
You can start an Individual Retirement Account for yourself that your future self will thank you for. You may even qualify for additional deductions for doing this. If you already have an account for retirement, that’s good. If not, it would be a great idea to use some of your yearly tax refunds and create one. It is never too early to start saving for retirement.
5. Make a donation
Buy some good karma for yourself. When you’re on a tight budget, it can be difficult to donate to your favorite charity or your local place of worship. Your tax refund gives you the chance to give back to your community. Also, don’t forget to claim the tax deduction for it next year!
6. Treat yourself
At the end of the day, you’re excited to receive some extra money in your pockets. Obviously, you won’t splurge and spend all of your money on something huge and unnecessary, right? It’s perfectly reasonable to spend some money on yourself because you deserve it after all the hard work. Maybe use the extra cash for a small vacation, fancy dinner, or a peaceful massage after those long hours of work, but nothing that’s way out of your budget. Here’s a little trick to help you: The 90/10. Take 90% of your tax refund and save it or use it for responsible choices and then, take the remaining 10% and spend it on whatever you’d like.
Although there are hundreds of different ways to make use of your tax refund money, these were just a few of the wisest ways to spend it. Don’t spend a single penny before you receive the money in your account and always make a budget or a spending plan before you start using the refund money.