Be Smart: Use Your Tax Refund Wisely

April 1, 2016 8:00 AM

refunds Be Smart: Use Your Tax Refund Wisely

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You did it. Your taxes are done, the forms are filed and you’re eagerly anticipating that tax refund deposit or check. So what will you be doing with that money? Sure, you could totally blow it on some shopping spree or large electronics purchase, but there are a few much smarter ways to use that money. Instead of spending frivolously, here are five other ways to use your tax refund that can end up helping you in the long run.

Bank It

Sure, this is probably the most boring of the many different ways you could spend your tax refund dollars, but it’s also the most practical. If you don’t have at least a few hundred saved for an emergency, this is a great time to start. You can use your tax refund (or at least part of it) and put it away for a rainy day. Find a good savings plan with your bank and just store it; that way, when the worst does happen, you’ll be prepared and it won’t break the bank.

Debt

If you’ve got any debt, then it’s a very smart idea to use your tax refund money to help pay that down. Start with your higher interest credit cards or loans and work down from there. If you’ve got a car loan or any other debt, you can pay that down as well. Pretty much everyone has at least some debt that could be paid off or at least paid down with a healthy tax refund.

Home Repairs

Do you still have dreams of fixing your kitchen up? Maybe you need new carpeting or some window treatments. Your tax refund can be a handy source of income to improve the value of your house. Plus, you could end up saving yourself money in the long run should you put that money towards a higher-efficiency furnace or low-energy appliances. Your tax refund could help to lower your utility bills.

Charity

Your tax refund may not seem like a huge check to you, but there are some people who could really use that money. Why not use that money to donate to your favorite charity or cause? After all, it’s money you may not have been expecting, so it could easily be helpful to someone in need. Make sure to keep your charitable donation receipts, however, so you can claim that next year on your taxes as well.

Travel

If you’re one of the lucky people without debt to pay off or other financial issues to solve, this is the time to use that money for something truly memorable. Travel is a luxury, sure, but it’s something that you’ll remember for the rest of your life. There’s nothing wrong with using your tax refund to splurge on something truly once-in-a-lifetime, so if you’ve got some extra cash, why not treat yourself to the vacation you’ve been dreaming about for years?

For more Tax Day tips, click here.

Deborah Flomberg is a theater professional, freelance writer and Denver native. Her work can be found at Examiner.com.

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