It’s about that time of year where tax refund checks are either coming in the mail or getting directly deposited into bank accounts. It’s always hard knowing what to do with your money, it could burn a hole in your pocket or it could just sit in the back corner waiting to go unnoticed. Did your refund check seem to burn a hole in your pocket last year, and you seem to not have anything to show for it? Well, if that is the case then you should consider a few of these tips for your refund check.
Tip #1- Put it in an emergency fund.
You should consider building an emergency fund because you never know when you might need some extra cash. Crazy things happen every day and you may need that money to pay one of your bills because you were short on cash that month. Or maybe your car needs a new windshield because a rock flew from a dump truck and cracked it. No matter what the case is, it is always smart to have an emergency fund.
Tip #2- Pay off debt.
It is always good to pay down debt because it’s never a good thing to accumulate debt. If it is credit card debt, then it is smart to pay that off so you are not paying for interest. Interest is one of those things that always seems to build up and is the worst part about paying back money you borrowed. Also paying off your debt can leave you stress-free and give you the energy you need to focus on different things.
Tip #3- Send it to the retirement account.
Retirement is one of those things that everybody wants, but not everybody is going to be able to afford. Today’s economy makes it seem like not many people will be able to have a retirement. With that being said, that’s a lot of years of working ahead of us. If you start saving now for retirement, then it will really adds up later for you. Every penny counts, and retirement is really nice after working for the past 60 plus years. You always want to look out for your future.
Tip #4- College funds.
If you have a child, then it is important that he/she has a college fund because college is not cheap and it will help them out when they need ten $400 books and barely have enough money to keep food in their stomachs. The more they have saved up then the more likely they will go to the school they desperately want to go to and it will help them out tremendously. Also, it gives your child a reason to want to excel with their knowledge and it will hopefully help them be successful.
Tip #5- Pay ahead on your mortgage.
This tip goes hand-in-hand with tip #2. Mortgage is a form of debt and even if you pay ahead on it a couple of times, then it will really help when it comes to the bank. Plus you will pay off your mortgage quicker and it only helps you out in the long run. It looks better to your bank as well and you will not spend 70 years paying off a $200,000 house.
Tip #6- Plan a vacation.
Go on that vacation to the Bahama’s if you would like. Nothing is wrong with seeing the world and realizing that there is much more to life than working everyday and paying bills. Not to mention vacations are good for the soul. Vacations give you time to relax and venture away from reality for a little bit. It is also good for your mental health to reward the hard work you have done and to get away from the same old.
Tip #7- Renovate your house.
If you are someone who likes to take time off but not leave your house, then renovate it a little bit. Spend the money on making that patio you really want or buy all the flowers to make that beautiful garden you envision out front to welcome your future guests. Nothing is wrong with investing in the place you live. It only makes you feel better and your home look appealing. Plus if you replace windows or upgrade to energy efficient appliances, then it will cut down on some of your bills so you end up paying less in the long run.
Tip #8- Donate it.
Last but not least, donate your money to a charity where someone will benefit from it. You can always use it as a tax deduction too. It may not seem like the best thing to do but it can make your community better and it will make you feel better knowing that you made a difference in someone else’s life.
These are just a few tips on what to with your tax refund. It is definitely smart to do something with your money rather than just spending it on not very useful things like clothes, dining out, or little things here and there. This article is designed to give you a better understanding about what to do with your refund check. Regardless of what you do with your refund check, we hope that this article has helped Money matters for the future!