It is tax time again! If you are getting a refund you have a lot of options to what you can do with your windfall. Below is a list of eight smart choices you can make with your tax refund.
1. Medical expenses
If you have medical bills that need to be paid, this is a great way to eliminate the bill. If you currently do not have any medical bills but know that you may have some in the near future, it would be a good idea to set aside your tax refund to pay for that incoming medical expense.
2. Pay off debt
Do you have a credit card with a high balance you have been trying to pay off for a while? Paying off a high interest credit card can save you money in the long run. You won’t be wasting tons of cash on interest or paying any kind of fees if you miss a payment. Plus, paying off debt like credit cards can help boost your credit score. It’s a win, win!
3. Cash cushion
Chances are you are getting a good sum of money back from your taxes. According to IRS the average tax return is $3,000! Saving it is one of the best things you can do. If you can find a savings account or certificate of deposit (CD) with a high interest rate, that is your best bet. But be careful with CD accounts. Some CD accounts charge a penalty if you need to draw cash out before the CD has matured.
Going back to school on your tax refund can completely change your life. You can learn a new hobby, learn something new and even make new friends. Taking a class can open your life to a whole new world of experiences. Some community colleges even offer classes designed especially for seniors. Check out your local community colleges for programs that interest you.
5. Be charitable
Find a charity you feel passionate and donate to them. Many donations to charities are tax deductible. Another option is giving your tax refund to your grandchildren to help pay for college tuition. You can set up a 529 plan which is a special account family members can despite cash to for children to use for college costs. Donating to a charity or helping your grandchildren pay for school is a wonderful thing to do. It can really change someone’s life for the better.
If it’s been a while since your last vacation, I suggest taking your tax refund and going on a nice little trip. Even if your tax refund is not enough to take that dream vacation to Hawaii, you can still take a memorable trip somewhere in your state. Check out your state’s tourism site to see where is the best place to visit in your own backyard. With a little research you can be surprised how much you can do in your own state.
7. Improve your home
Updating or improving your home is a great way to invest your tax refund. There are many small improvements you can make to your home without spending a lot of money. Home improvements can add value to your home.
Being responsible and doing what you’re supposed can get really boring. It can feel really good to splurge and use your money for anything you want. If you really can afford to get a little crazy with your tax refund, take this chance to really have some fun. Buy that item you have been passing up on because you said it was too expensive, you deserve it!
Your options to how you can spend your tax refund are unlimited. Hopefully these suggestions give you an idea on how to spend your tax refund.
What do you plan on doing with your tax refund?