Tax time is here, and many people will see substantial returns. Our first instinct is to spend the money on something we’ve wanted and to splurge on something we’d never usually buy ourselves, but that can lead to feelings of regret.
The extra money is always welcomed, and there are always several ways to put that money to good use. Here are some of the best ways you can use your return this tax season.
Take Care of Your Debts
The number one suggestion from financial experts is to crush your debts.
Use your tax return to pay off the balance of your credit cards, make an extra mortgage payment, lower your student loans, pay off your car loan, or pay back friends or family members that you’ve borrowed money from.
Especially during the pandemic, many people have found themselves living off credit, falling behind on their regular payments, and borrowing from loved ones. When your debt is high, it can cause a lot of stress, so many people are looking for ways to reduce both.
Credit card interest can add up, and saving yourself a car payment or two can save you money in the long run, so clearing your debt is a great idea when you get a refund during tax time.
Start or Rebuild an Emergency Fund
If the last year has taught us anything, it’s that everything can change at a moment’s notice. We’ve always heard of the importance of an emergency fund, with at least six months worth of expenses, but many of us haven’t created one.
With many people losing their jobs, they may have had to dip into emergency savings, or perhaps they never had one in the first place.
Using your tax return to build a new emergency fund or replenish the one you had will help motivate you to continue saving.
It’s essential to have a nest egg set aside if something happens on a global scale or personal level. Being prepared in case of those instances will ease a lot of stress when the time comes.
Prepay for Your Next Getaway
We’ve been stuck at home for a year, and many vacations were canceled, but we will be able to travel again. If you’re itching to get away, there are many ways to prepay for your next vacation.
Traveling is imperative for many of us. It allows us to de-stress, have fun, and worry less while taking a well-deserved and much-needed break from the responsibilities we face daily.
Investing in a fantastic vacation you’ll remember forever is something you should feel great about spending your money on. It also gives you something to look forward to. When traveling is allowed again, you’ll be so happy you did.
Start the Home Renovations You’ve Been Putting Off
When things break down in our homes, we often put them off as long as possible, unless it’s an emergency.
Using your tax return to do repairs in your home can be a significant investment, especially if you are looking to sell soon.
If you don’t have many repairs but you’re yearning for a change of scenery, there are plenty of inexpensive DIY projects you can take on in your home.
Most of us have been working from home for quite some time, so we’re noticing all the little things we don’t like about our spaces, or we needed to convert some space into a home office.
Update the paint, redo a backsplash, or upgrade some appliances that have needed to be replaced for a while. All of these add value to your home and are a tremendous investment.
Invest in the Stock Market
If your debt is paid, your emergency fund is overflowing, and you want to try your hand in the stock market, your tax return is the perfect opportunity.
With services and apps allowing you to buy into stocks right from your phone, you can choose low-risk options and start to learn about investing.
If you’re a seasoned pro, investing some extra money into some riskier ventures could be an excellent option for your tax return.
Invest in Yourself
Perhaps the pandemic has forced you to change direction in life, and a tax return would be the perfect opportunity to invest in yourself.
If there’s a course you’ve always wanted to take or a skill you’re dying to learn, now is the perfect opportunity to advance your abilities.
Many post-secondary institutions offer certificates or individual classes for those who want to learn specific software, marketing skills, management skills, and more. It looks fantastic on your resume and could help you land a better-paying job in the future.
Put Extra Money Into Your Retirement Fund
Your retirement fund can never have too much money! If you aren’t interested in the stock market or putting the money into emergency funds, putting it into your retirement fund is an excellent idea.
We can never be too prepared to retire, and the more money you can set aside for your future, the better off you’ll be.
Donate to a Worthy Cause
The world needs kindness, especially over the last year. If you have the means, donating your tax return to a cause that is near and dear to your heart is an amazing way to spend your tax refund.
There are likely people in need in your community, it would be extremely generous and considerate of you to donate the funds.
Leave a Reply