Responsible Ways to Use Your Tax Refund

By Jessica Santiago

Who doesn’t like shopping, vacations, new toys? At the end of the year, all we think about is how much we are getting back in tax returns and ways to spend it. While we’re only human and most of us want to splurge a little on our refund, careful money management for most of your return is a genius financial move.

Here are 5 of the most intelligent ways to use this year’s tax refund.

1. Pay Down Existing Debt

Paying down credit card debt is one of the smartest money management moves for your tax refund. Paying down other debt, such as a car loan, is also a wise choice. Be sure your loan doesn’t impose early payment penalties.

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2. Start a Savings Account for Something Big

If you want to have grand vacations or have decided it’s time to get serious about saving up the down payment for a house, open an account just for these significant expenses. Keeping the money separate from your regular bank accounts makes money management for substantial purchases easier and means you’re less likely to dip into it for splurges.

3. Make Home Improvements

You could repaint one or more rooms, install new bathroom faucets, buy a programmable thermostat, add new landscaping, or de-junk and organize your garage. Increasing the value and enjoyment of your home is smart long-term money management.

4. Get Peace of Mind

Ideally, you should aim to have enough in your emergency fund to cover three months of must-pay living expenses. Earmarking a portion of your tax refund to the cause will give you a head start on building up your financial fortress.

5. Invest in Yourself

Consider using some of your tax refunds to invest in yourself. Learning a new skill that’s relevant to your job could aid your career, and learning a new home-based skill, like cooking, can lower bills and improve your quality of life.

Sure, you’ve probably had your eye on a pair of shoes or a couple of console games for when your tax refund arrives. There’s nothing wrong with treating yourself; you’ve worked hard for it.

p.s. If you do something fun, send us a pic!  We love hearing from our friends.