Six Best Things to Do with Your Tax Return
Tax return season is upon us (yay!). I sent all of those taxes off, and I am getting a sizeable enough return. Now, full disclaimer, what you do with your money is not my business and is totally up to you! If you are also getting a huge return, you’re probably withholding too much. Being finance month, let's talk cash. If you want some tips on how we saved $2000+ a year, you can check out our post here, but nothing beats the sudden influx of cash that a tax return brings. It's like a gift from the IRS! Anyway. Now that the cash is coming, let’s talk about what I would do with it, in order.
1. Make that whole return an emergency fund.
If you don’t have a fund for emergencies, this is the time to get one. Less than a third of Americans have the ability to come up with $1,000 in an emergency. Putting a tax return away can be the start of a robust emergency fund for that rainy day.
2. Pay off debt.
Getting ahead on student loans, credit cards, car loans…whatever…can be major relief. Especially if it’s high-interest, it’s great to get ahead and get that off of your mind.
3. Pay all that car insurance.
If you typically pay your insurance monthly, pay it in a huge chunk. Not having to pay it each month will again, take that straight off your mind.
4. Put it towards your health.
Medical care can be expensive, sometimes even with insurance. Tax time is a great opportunity to go to the dentist and the optometrist. Another worry totally taken care of!
5. Invest it.
If you haven’t done much investing, a great place to start is the
6. Treat yo’self.
It’s a good time, now that there’s a little extra cash floating around, to buy yourself something that you’ve been putting off. Maybe it’s booking that vacation, or picking up some new technology, or pre-buying gifts for birthdays or winter holidays. Yeah, I’ll start shopping as early as May for upcoming holidays.
My tax return will be showing up anytime…and while I wish I was #6, I am more like #2 or 3. Better to take care of finances for the long term, right? I have a little debt that I'm working on, and don't love monthly payments. What are your plans for your return?