If you’re one of those lucky people that ends up getting a tax refund every year instead of owing money, please read this before blowing your windfall. If you’ve read my financial journey, you’ll know I haven’t always been the most financially responsible person in the world. But these tips are not only completely feasible, they work for ANYONE (not just the every-day fiscally-responsible).
Full disclosure, I did just get back from a women’s leadership conference in which Suze Orman closed the week out with an hour and a half of financial advice (and overall butt kicking). Therefore I’m going to strike while the iron’s hot, and the spirit of saving is still in me.
Since I am still human, and a realist, I’m going to suggest whichever of these you choose that you keep out 5%-10% (max) to do something fun with. Go out to dinner. Get a new set of dish towels (assuming I’m not the only one that gets a thrill out of new dish towels). Or treat yourself to a massage.
Now that the fun stuff is out of the way, we can focus on the responsible stuff. Here are some ideas that won’t leave you feeling guilty about how you spent your tax refund. But don’t worry, they are fun too. Just a more sensible fun than a new pair of shoes.
5 Smart Things to Do with Your Tax Refund
Child’s College Fund
If you already have one started, great! Put that refund right in there and forget about it until the Harvard bill hits. If you don’t have a college fund set up for your kid(s) yet, use this opportunity to get one going. In Utah we have the Utah Educational Savings Plan.
Do you have that one thing you keep putting off because of finances? Or the big project that will increase equity but keeps getting shoved to the bottom of the to do list? Well now’s the time to replace that bad toilet, or spring for a new roof. If your tax refund isn’t quite that big, maybe you just want to get a raised garden bed to start growing your own food.
If you always find yourself putting the Christmas presents on a credit card, try opening a separate savings account so you can save up all year. Use your tax refund to get this going, then you’ll have lots of time to keep stashing the mula away and have an even merrier Christmas!
The theme for our kids this year is “experiences not things”. In fact, my daughter’s 6th birthday party is coming up and she’s having an animal shelter donation party where kids bring items to donate instead of gifts. Similar to the Christmas fund, you could open a vacation account where you stash your cash to save up for that trip you’ve always wanted to take.
Pay Down High Interest Credit Card
Not as exciting as some of the others, but possibly the most practical. And in the long run this one ends up saving you more money than the others, because you’re not paying that high interest rate. Last year, we completely paid off a couple of smaller lines of credit with high interest which felt awesome. Or you could pay down a large chunk of a bigger balance you have out there, but keep paying the same larger monthly payment so you get it paid off faster.
Now please remember, I’m not a financial advisor nor do I play one on tv. But if you’re anything like me, I love finding new and different ways to save money. Hopefully you’ve gained some insights or ideas you didn’t have before.