Do you make smart choices when it comes to your tax refund? I know many people who look forward to tax time because they’re excited to be getting some money back. They wait all year for it and can’t wait to spend! Yet there are others who hate the tax season, because for them, it means paying a lot of money! For those of you who get a tax return, how do you use it?
I would not recommend splurging all your hard earned money. No! don’t do it. Don’t go out on a shopping spree wasting it on the latest and greatest while your bills are left unpaid. There are better, smarter ways to put your tax return to good use.
5 Smart Ways to use Your Tax Refund
1. Save for a big purchase- We’ll be using our tax refund towards the purchase of our first home! We’re currently house hunting and hope to find the right house by the end of the year. We feel a house is a great investment and we’ve been saving our tax refunds for years so we have enough for a down payment and closing costs.
edit: Since first writing this post, we’ve purchased our first home! We couldn’t have done it without the years of tax returns we put straight into our savings account. Now that we’ve purchased our first home, we’ll be saving towards purchasing another.
2. Pay down debt- If you have any debt, whether it be a credit card or loan, using your tax return towards paying it off is always a smart idea. Having NO debt should be a goal you work towards. Make it your goal, and one day you will reach it.
3. Emergency fund- It’s always a good idea to have some money saved away for emergencies. When I was pregnant with my youngest, I unexpectedly went into pre-term labor. Being that the hospitals on this island are not equipped to care for premature infants, I was flown to the island of Oahu where I had to stay for a month. My husband took off of work without pay for that month to be with me as I was on bed rest. If not for our emergency fund, I don’t know how we would have made it through the month. I can’t stress enough how important it is to have some money saved aside for emergencies.
4. Donate to a Charity- Not only does it feel great to be able to donate to a Charity, but you can also get a tax deduction if you itemize.
5. Family fun- Everyone deserves to have some fun! Using your tax refund to do something fun with your family is always nice. Take a trip or buy something fun for the whole family to enjoy. However, if you have debt, I would recommend paying it off first. If you have too much debt and can’t afford to spend any on family fun, you can always put aside a small amount. It doesn’t have to cost a lot to have an enjoyable time with your family.
How are you planning to use your tax refund this year?