Tis the season for taxes. Along with the inevitable dread that comes with doing taxes, also comes the tax refund for those who are getting a return. If you haven’t yet planned on what to do with your tax refund, I’ll go over some smart ideas that you may want to consider. Keep in mind that what people choose to do with their tax refund is a highly individualistic topic. But I do hope that this gives you some good ideas.
Lessen Your Debts
If you have a mortgage, car loan, credit card debt, or student loan debt, it would be wise to use your tax refund to pay it down. Chances are that you will save more of your money by paying down your debts than you will by placing that money in savings. You are basically throwing away hard earned money every time that you pay interests towards a debt. Even if you can’t pay off the debt, you can still pay it down. Every little bit that you pay down is going to help you not pay so much in interest.
Fix Some Things That Need Fixing
Most people have something that needs fixing, whether it’s major or simple. Make a to-do list of things around your home that need fixing. Make a wish list and then think about which items you could tackle with your tax refund.
If you have home improvements that you have wanted to get done, a tax refund may just be your ticket that you need to get things accomplished. Some home improvement ideas are a deck installation, remodeling job, building an addition, or landscaping.
Buy Things Ahead of Time That You Will Soon Need
We all need groceries and certain supplies to get by in life. By using your tax refund for those items, you will be lightening the load down the road. For foods that have a long shelf life, you may want to stock up your pantry with your refund. For me, I live on a farm and buy a lot of hay once a year. When I have extra money, I use it towards stocking my barn up before hay season. Since I know that I’ll always need hay, buying hay when I have extra money like from a tax refund will help me up down the line when I’m scrambling for hay money. Think of some things that you will need to buy in the coming year and use your tax refund towards it.
Fix Up Your Vehicle
If your vehicle needs new tires soon or a tune-up, why not use your tax refund to upgrade your vehicle while you have the money. Some ideas to consider are an oil and air filter change, or fixing broken issues like a cracked windshield or antenna. Think of all of the things that should be fixed if you were to try to sell it. Start there and make some vehicle improvements with your tax refund.
Build Up Your Emergency Fund
You can never go wrong by building up your emergency fund. Put all or some of your tax refund in your emergency fund. That way your money is not spent but will be collecting interest in a savings account for when you really need it.
Add To Your IRA
By adding to your Individual Retirement Account, you will be investing in your future. This is also money that will be available in the case of an emergency. You will thank yourself later for applying your tax refund to your IRA.
Make Home Improvements
Making home improvements can be a simple, yet significant, expense that your tax refund could fund. Home improvements could be to paint your house (interior or exterior), add a deck, or replace your front door. Whatever you choose to do, making home improvements will make life easier.
Donate To A Charity
If you have wanted to give to a charity, the tax refund that you will be receiving may just be the perfect time to do it. Remember that donations to charities will be tax deductible for your next year’s taxes, so keep a record of what you’ve given.
Replace Faulty Appliances
If your toaster oven or microwave has or is about to crash, now may be a good time to replace it. Check the electrical cords on common household appliances to make sure that you don’t have a hazard about to happen. Use part of your tax refund to replace faulty or broken appliances.
Start Your Dream Business
By using your tax refund for starting a business, you may be investing in a future income for yourself. Your tax refund can be used to get you a little further towards accomplishing your dream. This could be purchasing a website, paying for training, or putting a desposit down on a building. Nothing is too small to get started.
Take some or all of your tax refund and invest it in CDs or stocks. There are many investment apps out there that are great for beginning investors. At the very least, you could put the money in savings and start earning some interest on it. Soon your tax refund will grow into a larger amount by investing it.
We all like a little boost in life here and there. A tax refund spent wisely may be just the boost that you need to get ahead. I’ve given some ideas for smart ways to use your tax refund. I hope that this helped you to get thinking about how to use your money wisely!