Making the Most of Your Tax Refund

Anticipating your tax refund? In most cases, we spend our refund before we get it. Even with good intentions on how to spend your refund, it’s still never enough. You may feel that you’ve penny pinched all through 2017, and now it’s time to splurge.  While this is common, many of us may not have a solid plan on how to spend it. Then again you may plan but it never turns out the way you intended. For me, it seems that every year around tax time if it’s not my car that needs a repair, it’s a large bill that’s due. Here are a few tips I’ve used in previous years that helped me be able to spend my tax refund wisely.

Treat your refund as your regular paycheck.  In most cases, we view our refund as a gift or a bonus opposed to additional income. If your refund allows, it may be beneficial to pay ahead on some of your priority expenses. Such as rent or utilities. This will allow some extra funds to start an emergency fund. If you use a portion of your refund for one month’s rent, you still would put aside money out of your pay for that months’ rent. Doing this will keep you ahead and free up funds in case of an emergency. Another option is overpaying some of the smaller utilities, which will give you a jump start on emergency savings.

Pay off debts. Depending on the type of debts you have it may benefit you to pay them off in full. You can start by paying off your high interest or high balance accounts first. If it’s more appealing to see the accounts be removed one by one, another option is to tackle the small balances first. Keep in mind any collection accounts will not update until they’re paid in full on your credit report. Therefore, if you’re able to pay the collection accounts off do so, this will help improve your credit score.

Spend wisely.  Since you have the extra funds. Try not to spend your refund on miscellaneous items, take care of what’s needed. It’s not a bad idea to take care of any major repairs such as a car or home repairs. Major appliances are other items that may need to be repaired or purchased. If you’re waiting until tax time to purchase a vehicle, try to wait a little longer. Cars are more expensive in the first few months of the year. If you have medical or dental procedures that you’ve postponed, now is the time to take care of it.

Self-improvement and wants. Have you considered taking a class, or getting fit? This is a good time to invest in you. If you can pay for it in full and avoid a monthly bill, go for it! This is also an opportunity to start a small business or invest more in your current business. I’m a firm believer in working for something. You should not feel like you’ve worked hard and are not reaping the benefits. Definitely, set a budget which will allow you to spend money on you. Plan or take a mini-vacation. Treat yourself or family to a dinner or an activity that you normally are not able to enjoy. Keep in mind to follow your budget!

These are just a few of the many ideas to make the most of your refund. Always take care of your priorities first. Think about your personal financial situation, and make sure your money has a purpose. This will motivate you to get on the road to financial success. Save more and spend smart!

6 thoughts on “Making the Most of Your Tax Refund

  1. Thanks for sharing these great money saving ideas. I will definitely be taking advantage of a few of these ideas come income tax time. Well written.

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