Getting your tax return back is like celebrating Christmas early. The possibilities are endless – but should you be smart or careless with your tax return money? Money Crashers gives us a few tips and ideas on what to spend our tax refund money on:
Spend It On Something You Need
Low on groceries? In need of a new pair of shoes or a laptop? Your tax return could you save you from saving up. The extra cash bonus is a good way to ticket those items in for when you need them most.
Pay Off High-Interest Debt
The best time to eliminate any high-interest debt that you’re carrying is with your tax return money. Use this as an opportunity to pay off payday loans, title loans, debt consolidation loans, high-interest private student loans, car loans, or credit card debt.
Start Itemized Savings Accounts
Create a budget and divide your refund into pieces, with each set aside for savings for different items you’ll need in your bank account for important future purchases. Putting your refund toward specific savings goals can prevent you from debt.
Start or Increase Your Emergency Fund
According to Money Crashers, experts say “that your fund should contain about six to eight months’ worth of savings in an easily accessible interest-bearing account (such as an online savings account or money market account). Storing that much money might take months (or even years) if you’re just taking a little bit out of each paycheck, so use your refund to make a significant deposit to your emergency fund.”
Donate to Charitable Causes
Donating to charity may seem like the least priority on your list, especially if you are low on money. But giving back to the community can be a generous and a much more rewarding option than splurging on useless things.
Spend It On Something You Want
You’ve worked hard all year, it’s time to treat yourself to what you’ve earned. Set aside a desirable amount for your savings and an allowance on what you want to splurge on. That way you can use it for something fun like a holiday or shopping trip without surging into a financial chaos.