Five Ways To Spend Your Tax Refund
I know us newly adults and probably older adults as well, look forward to this time of year like a kid in December. A random check coming your way? Who doesn't like that kind of jump in their finances?
But sometimes we can be too quick to waste a nice check like that on something that really isn't helping us in any way. Or on a bunch of little things that don't matter. Sure it might make you feel great or rich for a hot second, but a month later will you regret it?
Today I'm here to help give you at least a few others options to use your tax return on, other than blowing it on a shopping spree, as magical as those can be. ;)
Five Ways To Spend Your Tax Refund On
ONE // PAY OFF YOUR DEBTS
I know, I know, "But Lydiaaaaaaaa!"
You guys, I'm telling you! If you spend your tax return on the first thing that catches your eye instead of putting it into that heck of a lot of student loan debt or credit card debt that you owe from buying too many eye catching things, you'll regret it. Living with debt is like living with a neighbor constantly knocking on your door for things that you have.
You don't own your money, or things when you owe money for them!
Even if your tax return won't make a huge dent into what you owe, you still should put it towards it. Every little bit helps and if you hate doing it that much then it will just give you more gumption to pay off your debt before the next tax return season! The only reason I would accept not paying off your debt first is if you...
TWO // PUT IT TOWARDS AN EMERGENCY FUND
I know, I'm no fun at all! But I promise you if you don't have an emergency fund when an emergency shows up, it won't be fun either. If you are living paycheck to paycheck it can be a slow moving train trying to get a full emergency fund set up. Having a nice boost of cash when you are living on very little can be perfect to set aside in case the unexpected comes up.
Hint: It always does!
THREE // INVEST IT INTO YOUR CAR OR HOME
No, I don't mean buy a new car! I mean fix all those repairs your current car needs that you put off because you "don't have the money". Read: Don't want to spend what money you do have on that. I get it! But, if you want your car to last for the long haul (or at least a longer haul), and you should, (because just buying a newer car every time something goes wrong is not the answer) then you need to take care of it along the way.
The other thing you should be investing into is your house, if you have one. (No shame if you don't because I'm over here dreaming of home ownership! Sigh. Not yet!) Everyone has those home repairs they know need to get done or even just want to have done, but never seem to get around to doing it or paying someone to do it for them. Stop that cycle and make it a point every year to spend your tax return investing in that home you spend so much time in!
FOUR // ADD IT TO YOUR HOUSE PAYMENT
Speaking of homes...
(I know we already talked about paying off debts, but I thought this deserved a point on its own. This would be my suggestion if you already have paid off your other debts and have an emergency fund already set up.)
You'd be surprised at how much faster you can pay off your house, (and in turn how much less you pay overall) with just a little extra cash each month. But big extra chunks each year also can speed up the process! You shouldn't ever be budgeting in your tax return as part of your yearly income, so it should just be an extra lump sum put into your bank account. If you get in the habit now of automatically putting that towards your mortgage, you will reduce your home loan by years!
Trust me, I've seen it!
FIVE // GO ON A TRIP
"Yes! Finally something fun!" I know I'm all work and little play.
The reason I'm ending it with this option is because I think too often we spend that tax return or any lump sum of money we get on little things. We spend a little for this and a little for that and eventually it's gone and we don't really remember what we used it for.
Whenever Greg and I get any amount of money that is not from our jobs, we set it aside instead of just putting it in the bank account or blowing it on one random dinner out. We make a point to spend it on something specific so that we will actually remember what we did with it rather than it getting lost in our bank account.
Take a couple thousand dollar tax return and plan a little getaway with it will leave a bigger memory and impact with you than just a month where you had extra money in your account, trust me! (Of course I'm still assuming you already have paid off your debts and have an emergency fund if you do this option.)
Well, I hope I didn't cramp your style too much with these options. I do truly believe that getting a hold of your finances, like paying off debt and having a savings will give you more freedom than one big check once a year can.
So I challenge you to try and do something different and better with your tax return this year and watch it pay off in the year following!
Now, let's chat! What do you usually spend your tax return on? Do you ever regret it later in the year? How do you feel about these options? Which one are you totally for or totally against?