As many as eight out of ten tax payers are liable to receive tax refunds every year, with the average amount typically coming in at just under $3,000. That’s a pretty serious chunk of cash by any reckoning, and it is way too tempting to just blow it all on petty luxuries. However, you might want to give some thought to spending your tax refund more wisely. After all, tax refunds aren’t exactly free money, but rather your own money that you had already paid in taxes! A bit of judicious planning should therefore be in order, and we just so happen to have five great ideas on how you could spend that money wisely.
Invest in yourself
Investing in yourself is by far the best way to put that money to good use. Whether it is furthering your education, ensuring your future health, or just investing in something that will make you more productive on a day-to-day basis, putting your money to use for yourself is one of the most prudent decisions you could ever make.
Upgrade your living space
With all the time you spend at home when you’re not working, doesn’t it make sense to put some money into upgrading your abode? It doesn’t have to be anything major either. Even something as simple as improving your kitchen, making your home weather proof, or even just investing in a more energy efficient accessory can work wonders in terms of making your home more livable. Energy efficient equipment will also save you money on energy costs, so you stand to get back even some of the money that you will spend!
Start a specific fund
If you’ve always wanted to go on a luxury vacation, or purchase your dream car, but somehow have never been able to put the money together, a tax refund could give you a good jumpstart. Of course, it is pretty tempting to spend the money that you will get back, but think of the long-term benefits of putting it into a fund. With such a healthy cash infusion into your savings fund, you will not only be that much closer to achieving your goal, but you will be more encouraged to continue saving up as well.
Investments for the long haul
Now might also be a good time to think even more long-term. Consider putting your money to work for you. Some options you may wish to consider are a 529 educational savings account, an IRA account, or a good solid business plan that you have always wanted to start. These are all feasible investment options that could prove to be profitable in the long run.
Give back
If you can’t quite make up your mind what to spend your money on, consider the possibility that you may already have everything you need. If that is the case, you might want to consider using the money to give back to society in some way. There are many options for doing so, including contributing to community-based efforts, local charities, or even just the people in your immediate neighborhood.
At the end of the day, it is still your money and therefore, your decision what to do with it. Regardless of what you decide to do with your tax refund money, it might be a good idea to take some time to figure out how it could benefit you the most.