17 Apr 5 Smart Things to Do with Your Tax Refund
Before that tax refund comes in the mail, it’s a good idea to create a plan for how you are going to use that money. After all, it comes only once per year, and you want to make it count. Here are five smart things to consider doing with your tax refund this year.
Put it into a savings account.
Even if you consider yourself to be relatively stable financially, one of the best things that you can do with your tax refund—and any unusual or unexpected source of income, for that matter—is put it straight into a savings account. In other words, act like you never even saw it. That way, you’ll have the money stowed away somewhere safe before the feeling of having extra money to spend sets in.
Eliminate existing credit card debt.
If you have a habit of making only the minimum credit card payment on your bill every month, this is a definite must. Instead of considering your tax refund extra discretionary spending money, reduce the cost of future accumulated interest by cutting down on your credit card debt immediately.
Use it as capital for your side business.
Have you had a well-thought-out business plan set on the back burner for months (or even years), simply because you haven’t had the capital to finance it? If your business plan is truly sound, then this might be a great way to use your tax refund. It will help you earn additional income over the course of the next year, and you’ll even be able to deduct that money next year during tax season.
Improve your home.
If you’re pretty well set in terms of being debt-free and having a thriving savings account, then now might be a good time to put some of that tax refund towards a much needed home improvement project like new flooring or new kitchen cabinets. When done right, a home improvement project can increase the value of your home, which is especially important if you’re planning to sell within the next few years.
Invest in yourself.
Have you set yourself up financially in such a way that you really can afford to spend it on something rather than put it into savings? Instead of using that money on a certain purchase you’ve been eyeing, consider investing that money in yourself in the form of a continuing education course, special skill seminar, or some other means of personal development. The investment you make here could truly make a major difference in the income you earn for years to come.