It’s tax season and that means it’s time for W-9s, accountants, and the always exciting tax refund. If you’re anticipating a tax refund you may want to spend some time thinking about where that windfall will go. Need some ideas? Here are ten smart ways to spend your tax refund.
1. Build Up Your Emergency Fund: Experts agree you should have three to six months worth of expenses saved up in an emergency fund. This will help with any unforeseen costs or bills that appear throughout the year.
2. Pay Off Some Bills: It may not be the most fun way to blow your tax refund, but it does make sense. Use your tax season money to pay down that credit card debt.
3. Pay Extra on Your Mortgage: Just one extra mortgage payment each year can significantly lower the amount you pay in interest over the course of your loan. Put your tax refund towards your house payment.
4. Give It Away: If you don’t need the money, give it to someone who does. Then you’ll be able to write your donation off on next year’s taxes.
5. Spoil Yourself: Reward yourself for all the hard work you’ve done by treating yourself to something nice. Maybe there’s a flat screen you’ve had your eye on or you’d love a nice massage. Go ahead and spoil yourself.
6. Make an Improvement to Your Home: Invest in your biggest investment– your home. Take your tax refund and upgrade a bathroom or kitchen. Or make an eco-friendly improvement that will lower your utility bills. When you go to sell you’ll be glad you did.
7. Save it For Retirement: It’s never too early or too late to save for retirement. Sock your tax refund away in a retirement account for when your golden years arrive.
8. Put it Towards Your Kids’ College: Use this money to build up or start a 529 College Savings Plan. It’s a way to save for college without having to pay tax on the interest you earn.
9. Learn Something New: Take your tax refund and invest in yourself. If there a class you could take that may help boost your earning potential, do it. Perhaps there is a conference you can attend that will put you ahead of the game in your field.
10. Pre-Pay Expenses: Often you can get a discount when you pay for an entire year’s worth of insurance or 12 months of a gym membership up front. Take advantage of that savings now that you’ve got the cash in hand to pay up in full.
