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Best Ways to Spend your Tax Refund

Best Ways to Spend your Tax Refund

Tax form 1040 and cash

 When you were a kid, you likely dreamed of days where your diet consisted only of gummy bears and chocolate syrup; now, you realize this combination only leads to two things: a sugar coma and a seriously upset stomach. What’s more, you realize that balance in life, work, play, spending, and even eating, is best.  Life is a balancing act. When deciding how to spend your tax refund, balance your impulse to splurge.  Be strategic, but also creative. Here are some savvy and balanced ways to spend this year’s tax refund:

Strategic Refund Moves

Boost your emergency fund. Life is full of curve balls and unexpected expenses. An emergency can pop up at any time, and whether it’s as small as a flat tire or as large as a long-term illness, an emergency reserve can help you deal with unforeseen costs.

Pay off debt. Put your refund towards your highest interest loans or lines of credit. Interest payments take money out of your pocket each month that you could put towards other important costs of living.

Boost your retirement savings. According to the United States Department of Labor, fewer than half of Americans have calculated how much they need for retirement. Even less are regularly saving for retirement.

Pay your premiums in full. By paying your auto or life insurance premium in full, you won't have to worry about remembering to make a monthly payment. Some companies also charge a monthly transaction fee, so if you pay in full, you could actually end up saving money in the long-term.

Creative Refund Moves

Give to others. Do you end up spending more than you anticipated on gifts during November and December? Consider creating a gift fund so you’re ready for these months, or donate to a charity you’re passionate about. Or, consider helping a friend in need with a grocery or gas gift card. 

Take a trip. Going into debt for an unrealistic and exotic trip could put a damper on what should be a relaxing time. Use your tax refund as your trip budget. It doesn't matter where you go. Whether's its a 60 minute drive or a 6,000 mile plane ride, going somewhere new and exciting can give you the vacation fix you crave. What's more, you won't have to go into debt. If you've only got few days, check out our suggestions for fun, budget-friendly weekends.

Invest in your health. It’s never too late to invest in your own health. Put your tax refund towards something that never goes out of style – your health. Buy a gym membership, new running shoes, or book an appointment with a massage therapist or chiropractor. You’ll feel better and reduce your chances of developing many common aches and pains.

Repair, don’t replace. Instead of buying a new phone, game system, or home appliance, what if you had it repaired? Chances are, you don’t really need something shiny and new, and you can have your gadget repaired for a fraction of the price. 

If you haven’t yet filed your taxes, consider getting a prepaid debit card and enrolling in direct deposit. When you e-file, your tax refund will be deposited right onto your prepaid card, which means you don't have to worry about waiting for your tax refund check, waiting in line to cash it, or even losing it.

Strike a balance between sensible and silly by thinking creatively and strategically about your tax refund this season. Have some fun, but don't forget about the necessities of today and tomorrow. Remember, balance is key!

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