Don’t Spend Without a Plan
The best way to spend your refund is in a strategized way. Even if you’re spending your money in a smart way by paying down debt, you shouldn’t pay down the first credit card you think of. Which one has the highest interest rate? Which one has the highest payment? These are questions you should ask yourself.
Upgrade Your Computer
Computers are expensive, and it can be tough to upgrade without having a lot of money in your pocket. A slow computer can make work and school a real pain. If your laptop or desktop isn’t performing like it used to, consider upgrading to something a little better.
Chip Away at Loans
Loans take a while to pay off, but you can use your tax refund to cut down on how much you still owe. This will impact your credit score in a good way, and give you a little reprieve on payments when you need it post.
Pay Down High-Interest Debt
One of the best ways to spend your tax refund is by paying down high-interest debt from credit cards. Even if you pay the minimums, it can take several years to pay down credit cards that have interest rates that are 15% or even 25%. Plus, you end up spending more in interest than on the actual purchase!
Build or Rebuild Your Emergency Fund
An emergency fund is essential. Many financial advisors encourage you to have at least $1,000 in your emergency fund, but we’re going to say you should have three months’ salary saved up. If something happens, you’ll be prepared.
Get Dental Work
Dental work isn’t cheap. Getting cavities filled or root canals can chip away at your annual maximum and cost a hefty sum without knowing it. It may not seem it, but your oral health can profoundly impact your overall health, so get those teeth looked at!
Maintain Your Car
If you live a busy life, getting from point A to point B is essential. Repairing or getting upgrades on your vehicle won’t be cheap, but it’s worth spending a little extra to make your commute better. Get new tires, a windshield sunshade, or whatever you need to increase the longevity of your car, truck, or SUV.
Buy Gym Equipment
Going to the gym sucks, so a lot of people don’t go. Instead, use your tax refund to buy gym equipment for your home. Then, you won’t have any excuse not to exercise, and you won’t have to pay a monthly fee to get fit. It doesn’t have to be a lot—a treadmill or a pair of dumbbells can make a huge difference.
Invest in the Stock Market
Want to turn your money into something more? Invest in the stock market! With just a few hundred dollars, you can turn your tax refund into a sizeable amount that you can spend later in life. Even if it’s a thing of mystery, you can dabble in cheap stocks that are under $10.
Get a Good Coat
Do you have a good coat to last you through the freezing winter? If the answer is no, or if the one you own is getting a little worn, get a new coat. A good, heavy, winter coat will last you several years, so it’s worth spending a couple of hundred dollars.
Make Home Improvements
Investing in your home is a great decision. First of all, you’re making your home more enjoyable to be in. Second, you’re increasing the value of your house should you ever decide to sell it. Even something small like replacing appliances can help!
Consider Getting a Retirement Account
Even if you have a 401k, it may be worth it getting another retirement account. According to The Motley Fool, you should have five times your annual salary saved by the time you’re 50—that’s a lot of money. If your 401k isn’t cutting it, you can get an IRA or a Roth IRA to supplement.
Donate to Charity
Feel like giving back? Giving to charity is a great way to spend your tax refund. It doesn’t have to be all of it. Even a small amount can make a difference. Not to mention, giving to charity is a great way to get more money back next year.
This one may seem like a given, but you should save it in an account that’ll gain interest. Just because you have the money doesn’t mean you have to spend it immediately. You can even squirrel it away until the end of the year, so you can get the stuff you want on sale. That alone can save a good amount of money.
Create a College Fund
Whether it’s for your kids or grandkids, a college fund is a great way to spend your tax refund. It’s no secret that college tuition and fees are increasing each year. According to U.S. News, the average tuition at public National Universities has risen 243% since 1998.
Invest in Your Career
One of the best things you can do with your tax refund is to invest in your career. Take a few courses to increase your knowledge. If you can’t afford the time or money to go back to college, you can take a class on Udemy. Continuing your education is never a bad thing.
Start a Business
You don’t need to quit your current job! Your tax refund can give you the opportunity to start the business you’ve been talking about. Now, you have the money. All you need is the time, and you’re made in the shade.
Buy Life Insurance
Life insurance is one of those things we put off every year until it’s too late. The longer you wait to get life insurance, the more expensive it is. Instead of waiting another year, talk to a life insurance agent and get covered.
Rather than spending your money on stuff, experience something. If you don’t have the money to go on vacation, you can spend your money doing something with friends locally. Go to dinner with them or do something daring—how does sky diving sound?
Make Your Home Energy Efficient
Making your home energy efficient can be expensive, so tax return season is the perfect time to start upgrades. Overall, you’ll end up saving money on your light bill, so you may not even spend as much as you originally thought.
Encourage Eating at Home
How much do you spend on going to lunch or dinner? Probably a lot, especially if you go out regularly. If you spend some of your tax refund on something to encourage you to eat at home, you might do it more often. Consider getting a new stove, cookbooks, or ingredients.
Fill Gaps in Your Insurance
Now is the perfect time to fill gaps in your insurance policies. Your liability insurance may be lower than you need, or you may not have flood insurance—hurricane season is coming! Look over your policies and make sure you’re fully covered.
Prepay for a Vacation
Your tax refund isn’t just for responsible stuff. If you spend a little of your money on a vacation, you’re actually making a wise decision. Vacations can improve your mood, which can benefit your career and your life in several ways.
Meet with a Financial Planner
If you’re really unsure about the best way to spend your tax refund, visit a financial planner. These individuals will go over all of your options, but they aren’t free. Some can cost as much as $250 per hour. Shop around but be sure to visit someone with a firm grasp of the topic.
Create an Estate Plan
Do you have an estate plan ready? If you don’t, you may want to consider getting one set up. A lawyer can help you set up everything you need to divvy up your assets, appoint a guardian for your children, a healthcare proxy, or anything else you may need.
Splurge a Little
We’re not here to say you need to spend your tax refund on only responsible things. If you’ve been eyeing something for a while, it may be good to purchase it now. We just recommend not spending a huge sum on items you won’t use a month from now.
Pay Off Medical Debt
Do you have any lingering medical debt that you haven’t paid off? A tax refund is a great time to pay off medical debt that's accrued throughout the year. The last thing you want is for the bill to go to debt collectors because you forgot about it.
Upgrade Your Phone
Are you still using an older phone? Is it slowing down and having issues with new apps? New phones are releasing, which means you can upgrade your phone for a lower price. Consider getting a new one while you have the cash.
Get Ahead on Bills
There’s nothing wrong with getting ahead on your bills. If you don’t owe anything, you can always put a little money in your account. Most companies are more than happy to credit your account.
Get a New Car
If your car isn’t getting you where you need to go, think about trading it in and getting a new one. Depending on how much you get, you might be able to buy a used car outright. Alternatively, you can use your old car and some of your tax refund as a down payment on a brand-new car.