The big day is finally here. No, it’s not your wedding or your graduation day or even your dream vacation. Your tax return has arrived.
There are truly endless ways to spend the money the government kicks back to you in April, and a lot of them are, well, frivolous. As nice as it’d be to go on a shopping spree or the aforementioned dream vacation, there are some wise ways to spend your money that won’t have you wishing you hadn’t.
In fact, you might make yourself richer in the future by putting this year’s tax return to good use. Here are five smart ways to spend your tax return.
Put a Dent In — or Eliminate — Debt
Ugh. Whether it’s student loans or credit cards, you probably have some debt laying around. A sizeable tax return could put a sizeable dent in that bottom line. Even if you can’t pay it all the way off right now, paying more than the minimum payment can save you loads in interest over time. Oh, and by paying back the balance on your credit card, you will free up a healthier credit line in case of emergencies, which is probably why you even have the card in the first place.
Buy Something You Need
Perhaps there’s a big, expensive purchase you’ve been waiting to make over the past few months — and no, we’re not talking about a flat-screen TV. Instead, think things like car repairs, a new washing machine, an updated smartphone … these types of items are justifiable spending if you really need them and have been waiting to buy them until you had some flexibility in your income. Here’s your chance.
Build an Emergency Fund
This might sound boring, but you won’t be mad to have an emergency fund when you really need it. Think of it as a contingency plan if you ever were to lose your job. How much would you need to sustain your life for six months while you search for work? Depositing your tax return into an emergency account can fatten up your fallback plan and help you rest a bit easier in tumultuous economic times.
Focus on Your Health
Not everyone has that dream job … you know, the one that pays well and provides health and dental insurance along with a healthy check each month. If you fall into this boat, use your tax return to take care of yourself. Schedule a physical or have a dentist get rid of the cavity that’s been bugging you for months. Now that you have a little extra in your wallet, there’s no reason not to.
Of course, you could also use your money to improve your physical fitness and health. Perhaps this means paying the membership fees at your local gym or buying some equipment so you can sweat it out at home, on your own schedule. Either way, you should feel free to spend your return on something that will better your health and your state of mind.
Invest Your Money
Finally, another smart move is to put your refund into the stock market and let it grow over the years. A few hundred dollars could turn into thousands or more with the right investment. You could try going it alone, and there are many easy ways to get your foot in the door. Or you could rely on the help of a professional investor, although you might have to add a bit to your initial investment to make it big enough to warrant this type of oversight.
Either way, the money you make this year could multiply to the point where you have a robust retirement fund by the time you’re ready to kick your feet up in 25 to 30 years. It sounds crazy, but it’s seriously possible when you invest today.
Now, Spend or Don’t
The above ideas either involve you setting your tax refund aside or spending it wisely. It’s up to you to make the decision as to how you’ll spend it and to then follow through on your plan. When you do, we can guarantee you’ll be happy you did one day down the line when you have a working car, a debt-free credit line or a big, fat retirement account waiting for you at 65.
Now, get out there and (don’t) spend your money.