Smart Ways to Spend Your Tax Return

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Smart Ways to Spend Your Tax Return
  1. Be Practical: If you are considering purchasing a 24 jet hot tub for the backyard, but you live in an apartment building that you do not own, that is not practical. Think about the things you need that can increase the quality of your life.
  2. Emergency Fund: An emergency fund is important for those rainy days, where you need some liquid cash to handle an unexpected hurdle. Try to have at least $1,000 in an emergency fund. This money will come in handy if your car breaks down, if you need to suddenly go to urgent care, or even if you forget to pay a bill. Make sure that your future is secure.
  3. Invest in Your Health: Buy bikes and jump ropes for the whole family. This will increase their activity, making everyone healthier, but it will also increase the amount of time you all spend together as well.
  4. Pay off Your Debt: Your tax return can get you partially, or even completely out of debt depending on how much debt you have and how much your tax return is worth. If you have a payday or title loan out, pay that off first, along with your credit card debits.
  5. Invest in Yourself: This will allow you to let your money work for you. Take that certification class, finish up your degree, buy self-help books, go to a career-related conference, or join a professional organization. All of these things can open some really big doors for you in the future, all while increasing your résumé experience.
  6. Purchase Life Insurance: This is an easy thing to overlook the necessity of, until someone falls terminally ill, and you are left to figure out how you would pay for their funeral arrangements. A term life insurance policy will bring you great comfort knowing you are protected in the case of emergency.
  7. Buy an Experience: Many will say that this is not a smart use of tax return funds, but nothing takes away the stress of the world, like a modest vacation. You can go on a hiking/camping trip with friends, or to see your favorite singer in concert. Buying and creating experiences lasts a lot longer than buying material things.
  8. Donate to Charity: You don’t have to give your entire return back, but whatever you decide to give, it should be from the heart. You giving will benefit your community, and help a lot of people. You can also claim your charitable donations as tax deductions as well.
  9. Invest in a Business Venture: If you already have a business and were contemplating ways to elevate it without going into debt, using your tax refund will definitely help you out. If all goes well, your investment will turn into income.
  10. Start Your Own Retirement Account: Retirement is not free. The longer you wait, the less money you will have in your account when it is time for you to retire. Aside from the 401K you have from your job, you can open up your own Individual Retirement Account (IRA). You can make a one-time contribution, or make several smaller ones over time. Talk to a banker for more details on the options, and decide what route is best for you to take.
  11. Start a College Fund: Children are the future, and the cost of education isn’t going down any time soon. Loved ones will be extremely grateful to know that you cared that much about their higher education expenses.
  12. Make Repairs: You have probably seen some things around the house that need to be fixed, and perhaps even felt some things in your vehicle that need to be addressed as well. Now is the time, repair the leaky faucet, and get that 50,000-mile check-up your vehicle needs.

Tax returns are the government’s solution to taking too much money out of your paycheck throughout the year. So yes, while it may seem like they’re just paying you back, they are actually just giving you your money back without interest. Many people say that it is literally an interest-free loan to the government.

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