It is that time of the year again when tax refunds are in the air and there are a lot of things that you can do with your tax refund money. Things that warrant your tax refunds attention, like vacations and new big screen TV’s. For some of us, as soon as we see or find out that we are receiving a refund our mind goes in a million different directions trying to figure out what to do with the refund or how to spend it.
You may have heard this before but there are really only three things that money is good for: spending, saving, and giving. Therefore with your refund money you will probably be doing one if not all of those things.
Before you do anything sit down and plan what you are going to do with your refund. Make a list of priorities, number the priorities and stick to your list.
You still probably have many demands on your tax refund money if you are getting a tax refund.
4 Best Ways to Use Your Tax Refund
Pay off Debt
Debt is bad. The bible says that borrowers are slaves to lenders. Therefore, if you have debt and you are getting a tax refund, paying off debt should be a top priority. Paying off a high interest rate credit card is almost like paying you the interest. Additionally, paying off debt will allow you to save some money towards your savings goals.
Start an Emergency Fund
If you do not have an emergency fund now is an excellent time to start one. An emergency fund is a fund you would use for situations that come up, unplanned, so you do not have to disturb your budget. An emergency fund can be any amount you think you would need for emergencies but three to six months of expenses is a good place to start. Use your tax refund money to start that fund. If you do not have enough refund to fully fund an emergency fund save ten percent of your refund and work on saving the rest. Having an emergency fund allows you to rest comfortably knowing that you can take care of emergencies that do arise.
In the economic environment that we live in today, it might be a good idea to save more than three to six months of expenses for an emergency fund. In any account, an emergency is bound to come up and you will have the money or some money to take care of it.
Spend a Part of Your Tax Refund
As I mentioned earlier, money is really only good for three things; spending, saving, and giving. It is okay to spend your money and you should spend some of your tax refund money on something that you want. Decide on how much you want to spend, make a plan, and stick to the plan amount.
Make a Contribution
My last suggestion for your tax refund dollars is to give some. Give ten percent of your refund to your church, a charity or to your local school. Charitable donations are a good thing and make you feel good inside knowing that you helped someone or some cause with your contribution.
Article by Wil G.
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These are some really great tips! I completely agree with you. I really like, too, how you added spending some of it on yourself. It’s so much easier to stick to a budget and be responsible with your money when you allow yourself to use a little without regret.
Jessica07 recently posted..Relationships and Finances- Learning About Finance Together
Jessica,
.
Yes, allow some for your self – just not all of it
Oh. Is THAT my problem? LOL
Jessica07 recently posted..What is Leverage
Certificates of Deposit are one of the safest investments you can make. First, they are the least risk of all higher yield accounts and they are insured by the FDIC just like any other bank account.
I have purchased a lifetime gym membership. You’re right that we should pay off debt. Thanks for the great tips!
Dave recently posted..Why Outsource Tax Preparation Services
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