How to Spend Your Tax Refund Responsibly
Getting your tax refund is exciting, especially if you’ve waited a long time to receive it – and you probably already have something in mind that you’d like to buy with it. However, this year, instead of spending your entire tax refund all at once on a pair of new shoes, headphones, or a new computer, consider spending it responsibly. Using your tax refund towards debt or long term goals might be hard right now, but your future self will thank you.
Make a Plan
After you file your taxes and find out how much your tax refund will be, start making your plan for how you’re going to use it when it comes. If you wait until you have the money in your hands, it’s much harder to keep from spending it all. You may even want to write your plan down in order to hold yourself accountable for using your tax refund responsibly. Just like when you wrote your budget you’ll have more success sticking to a plan that’s on paper.
Consider Your Debt
Do you still have outstanding debt from the holidays? Is your credit card debt nearly paid off? Using your tax refund toward any or all of your debt will buy you the peace of mind that no new possession can. If outstanding debt is weighing you down, paying off part or all of it with your tax refund will put you at ease, and may even be the boost you need to begin rebuilding your credit.
Think of Long Term Goals
If you don’t have any debt or don’t want to put your tax refund toward your debt, think about applying it to your long-term goals. If you’d like to go on an international trip, buy a house or car, or go back to graduate school, every little bit helps. Putting your tax refund into savings will get you that much closer to achieving your long-term goals and making your dreams a reality.
Don’t Forget Savings
Even if you’re not saving for anything in particular, it’s always good to build your savings up just in case. You never know when you could need that extra money for unexpected emergency expenses or to go out of town on short notice. Saving your tax refund will give you a cushion and protect you from falling into debt in the future.