Tax season is officially upon us! If you’ve been squirreling away extra money each paycheck in the hopes of a hefty tax return, on the day you receive your check it may just feel like you’ve won the lottery. While your first impulse may be to buy a sports car or book a one-way ticket to an exotic island, those may not be the wisest ways to spend your money. After all, it is your money that you earned; the government has just been sitting on it for a while.
So, instead of squandering your hard-earned dollars on impulse buys or even just letting them sit in your bank account, taunting you like the lump-sum temptation that they are, make your money work for you.
Not sure where to begin? Her are a few smart ways to use your tax return.
Pay Off Your Debt, Especially If It’s High Interest
If you’re in debt — whether it’s due to student loans, a car payment or even a mortgage — using a tax return to pay it off couldn’t be a wiser choice. Your tax return will give you an extra bill-paying boost, helping you to achieve a life without debt a little sooner than you planned. If you have more than one loan, put your extra money toward paying off whichever has the highest interest rate first.
Pad Your Emergency Fund
While there’s no way to predict the future, there’s no harm in aiming to be prepared for what’s down the pike. In the event your car or large household appliance kicks the bucket or, heaven forbid, you lose your job, having a financial safety net will help you get through the hard times. By stashing all or a portion of your tax return in your emergency fund, you will be ensuring your financial stability, even when unexpected issues arise.
Invest in Your Education
If there’s a certification you’ve been hoping to earn or even a degree you want to pursue, put your tax return toward your education. Using your tax return for your education can only be beneficial, as a new degree or certification can help you get a promotion at work or even land a higher-paying job.
Pay for Your Essentials
When money is tight, many people put off paying for major expenses, regardless of how essential the need may be. Some of these expenses that are often put on hold include medical issues, such as dental work or new glasses, or a pricey car repair or a new furniture purchase.
If your tax return can help you pay for one (or maybe even more) of these more costly services, do it. There’s no doubt you will be relieved you spent your money in this way.
Do a Home Improvement Project
While it may not be at the top of your list if you’re on a tight budget, putting some TLC into your home if you have to funds is always a good idea. Whether your home improvement project is as small as a new coat of paint or more involved like a plumbing issue or even as grand as a kitchen remodeling, your project will be undoubtedly adding value to your home.
Even if you don’t plan on selling anytime soon, updating your home will help to ensure that your house is always in working order and will make your home a better place to be.
Add to Your Vacation Fund
It’s true that exploring the world is one of life’s most rewarding experiences. However, taking a vacation can also be a very costly endeavor, especially if your travel bucket list is a long, all-inclusive queue of exotic destinations. So if your tax return has gifted you with a large sum of money, put it toward your next vacation. Whether your return is enough to pay for a night in a hotel or even big enough for a flight, adding to your vacation fund will help you accomplish your travel dreams.
If you’re expecting a sizable tax return this season, do your best to make the most of your money. Before receiving your check, examine the areas of your life where you could use a financial boost — whether it’s your health, home or even your education — and plan to use your check accordingly. By using your tax refund check wisely, you will increase your financial stability, decrease your stress over monetary woes, and ultimately enjoy daily life a little bit more.