It’s tax season. For some folks, that means a significant refund is heading their way. When we find ourselves with a little extra cash on hand, it’s tempting to spend it on shopping sprees, extravagant dinners, or electronic gadgets.
And then it’s gone.
How can you stretch your refund so that you’ll continue to benefit from it into the future? Here are FIVE practical ways to use your refund and FIVE fun (yet meaningful!) ways to use it. Make the most of your extra cash this year!
Five Practical Ways to Use Your Refund:
1. Pay down debt
Although it may not sound like a lot of fun, one of the best ways to utilize your refund is to pay off debt with a high interest rate, like a loan or a credit card. Credit cards can have interest rates that run close to 18%, so every month you delay paying them off only sinks you deeper into the red.
2. Invest in your future
Now is the perfect time to fund your retirement! Just think of those long, lazy days you’ll enjoy once you’ve saved up enough money to retire. Start funding that dream!
3. Invest in your children’s future
4. Stock up your emergency fund
Unexpected events (whether positive or negative) can suddenly require significant amounts of cash on hand. That’s where your emergency fund comes in! If you’re not sure why an emergency fund is important, please revisit my blog post on this topic.
5. Invest in energy efficient home projects
Whether you’re replacing inefficient light bulbs, adding insulation, or upgrading your windows, it’s a great idea to make your home more energy efficient. According to Trent Hamm of The Simple Dollar, making your living space more energy efficient can “reduce your monthly energy bill, meaning that in the long run the money you spent will become a tremendous investment with monthly dividends on your electric bill.”
Five Fun Ways to Use Your Refund:
1. Buy an “experience”
Instead of buying “stuff,” use your refund to buy an experience that will be memorable for you and your family. Go on a hiking or skiing trip; take a boat trip together; or use the money for airfare for a vacation.
2. Upgrade home appliances
If you’ve had your eye on a new KitchenAid mixer or stainless steel appliances, now is a great time to purchase them. Your brand new appliances will also motivate you to cook at home more often, which can lead to long-term savings.
3. Fund your hobbies
Meaningful hobbies can keep your mind fresh and your body active. Consider involving the rest of your family too! Join a hiking club, explore stained glass-making, or buy a season pass to the theater.
4. Invest in wellness
Use your extra cash to spring for better quality food (more fruits and veggies, organic eggs, etc.) or join a gym. Investing in your personal wellness will pay dividends in the long run!
5. Give back
Improve your world. Give to worthwhile charities (many gifts are tax deductible) and set a great example for your children. If you’d like more ideas about ways to give back, check out my recent blog post on the topic.
How will you utilize this year's refund? Let me know if the comments!
And if you'd like help planning your investments, by all means, be in touch.