It’s tax refund season, and if you’re on the ball and have already filed your taxes, you might be wondering how to use your income tax refund wisely.
Key word there: wisely.
I have seen so many people get thousands back for their tax refund, and literally blow it all on junk or unneeded things that are just ‘wants’, even when they are in debt big time. This is sooooo not a smart thing to do!
Even if it seems like free money, don’t treat it like you can just go on a shopping spree. Your bank account will thank you greatly later.. and you’ll feel better down the road as well.
Now matter how big or little your tax refund if this year, be smart with it.
How To Use Your Income Tax Refund Wisely:
Pay Off Debt
If you have any kind of debt whatsoever, whether it be an auto loan, a student loan, a hospital bill, or even credit card debt, PAY IT OFF FIRST. If you owe any company or person money for whatever, it’s considered debt, and you should never be buying things just for fun instead of paying off your debt.
If you have multiple debtors, pay off the debt that has the highest interest rate first. You can also learn more about paying off debt the smart way by reading about the Debt Snowball Calculator by Dave Ramsey. (He’s a money genius!)
Build Up Your Savings
If you are completely debt free, it’s a really smart idea to put your tax refund into savings. You never know when an emergency will happen, and especially if it’s an expensive one, you’ll want to be prepared.
You should have an emergency savings of at least six months living expenses saved up at all times. After that it’s a good idea to start a high yield savings account, a CD, or an IRA.
If you have been trying to afford to be a stay at home mom, now is the time to save up!
If you are debt free and have a large savings built up, think about investing your refund into something better and smarter for your finances in the long run. There are many things you can invest in, but think smart and do some research first. Try this beginner’s guide to investing.
If you’re wondering how to use your income tax refund wisely to invest in your own business, I have a deal for you! For the month of February, when you join my Young Living team and purchase the Premium Starter Kit through me, you will get a bottle of Grapefruit essential oil for FREE as a special gift from me for making a smart decision with your tax refund. Grapefruit is one of my favorite essential oils to use daily, and will be a great addition to the many full sized bottles of essential oils and diffuser you receive with the Premium Starter Kit! Email me or visit the Work With Me page at the top for more information. 🙂
Save for Retirement
There are many different ways to save for retirement, and at least one is a must. You can invest in a Roth IRA, add to your 401(k) if you have one, or even just start a new high interest savings account or CD specifically for retirement.
Purchase Only Necessities
If you have already payed off debt and have a large savings built up, if you decide to make purchases, only buy something that is a necessity. Think of things that will be worth the investment and something you can get great use out of for a long time down the road.
Try to find deals for paying cash on things like a new vehicle, new appliances, a new mattress, or even home and vehicle improvements. Avoid useless and impulse spending on things like clothing or electronics. Even buying things like toys for your children or something for your favorite hobby would not be the best way how to use your income tax refund wisely.
Use the tips above and make sure you know how to use your income tax refund wisely this year! Although it takes discipline, you will be glad later on.
How do you use your income tax refund? Comment below and let us know!
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