How To Use Your Tax Refund Wisely

How To Use Your Tax Refund WiselyIt seems like everyone spends money like crazy during tax season. People will buy 70 inch TV’s, designer handbags, and even a brand new car. While it’s okay to treat yourself, using your tax refund to buy a bunch of items you don’t need, only to be broke again in a month, doesn’t really make any sense. So here is how to use your tax refund wisely!

Save 1,000

If you don’t have an emergency fund, using $1,000 (or more if you need) of your refund should be a top priority on your list! This is one of the easiest and best ways to use your tax refund wisely because it can keep you from getting into debt during emergencies.

If your car breaks down, you are hit with a huge hospital bill, or any other number of emergencies, you’ll feel better knowing you have a stash of money in your savings to help you pay for them. Don’t make the mistake of not saving any of your refund, it’s just not the smart thing to do.

Don’t Get A Refund Advance

In recent years, refund “advances” have become a hot topic for many people. The loan companies want you to think that they are doing you a favor by offering you your “tax refund” early. They offer you up to $1,300 as an advance, and then charge a ton of extra fees to file your refund itself! Think about what you could do with that extra $200-$300 dollars.

Instead of getting a cash advance, file your taxes early if you really need or want your money that bad. If not, choose direct deposit when you do file so you can get your money a little faster. These are smarter ways to get and use your tax refund wisely.

Open Or Add To A Retirement Account

Are you preparing for retirement? We aren’t getting any younger. If you are filing taxes and getting refunds, I can almost guarantee that you are an adult, and that means you need to be saving for the day that you won’t or can’t work anymore.

A great way to prepare for retirement is to use your tax refund wisely and deposit some cash into your new or existing account, and don’t touch it!

Pay Your Bills

If you are normally behind on bills or have expenses that come up that aren’t part of your monthly budget (like car insurance) take some money from your refund and pay them off! A single mom was able to pay her rent for the entire year with her refund. You may be able to give yourself some wiggle room in your budget by paying off higher ticket items.

This is a great way to use your tax refund wisely because you can pay off debt or bills that may be costing you more money by keeping them. Think about what you can do with some extra cash every month!

 

While these options are great ways to use your tax refund wisely, the main thing is to remember to set yourself up for success throughout the year. If you can pay your bills, but haven’t been saving too much, save what you can from your refund. There isn’t anything wrong with treating yourself either, just make sure you aren’t trying to be a baller on a less than baller budget.

Dorethia Kelly, MBA is the president of Conner Financial Coaching, LLC, providing results-oriented personal finance and business coaching services. She is also the founder of the popular #MoneyChat personal finance blog, themoneychat.com and online Twitter chat hence the inspiration for… #MoneyChat THE BOOK! How to Get Out of Debt, Manage Your Money and Create Financial Security! Get your copy on Amazon today!

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