It’s April, which means unless you are living under a rock, you know that it’s tax season! If you have been paying into your account, then you may be one of thousands who are looking at a coveted tax refund – an opportunity to cash a bonus check. This extra cash can play a significant role in how your organize and plan for the future, but it is also easy to be blind sighted by that new TV or car, but are these really smart?
Taxpayers can often get a tax refund on their income tax if the tax they owe is less than the sum of the total amount of the withholding taxes and estimated taxes that they paid, plus the refundable tax credits that they claim. (Tax refunds are money given back at the end of the financial year.)
Below, Male Standard compiled 5 worthy ways to spend your tax refund that will actually make a real difference in your immediate and long-term future.
1. Build a Nest Egg
You might be excited at the prospect of a ‘free’ check, but saving – not spending – your tax refund is the smarter of two moves. Where we could previously spend tax refunds on luxurious extras, the majority of Americans now live paycheck to paycheck. Building a nest egg means having a reserve in a savings account, accruing interest. In the event of an emergency. you will be thankful to cash that check, instead of pawning a TV for chump change.
2. Reduce Your Debts
If you have credit card debt, you may benefit from banishing that debt instead of building a nest egg. These debts are particularly damaging as they require a monthly commitment. If you become sick, for example, you may not have the funds to cover one month. Banks add on elaborate fees that will hold you back. Instead, your tax refund could catch you up or clear your debt altogether. This will increase your monthly income!
3. Do a Home Audit
After credit card debts, monthly household bills account for one of our largest expenses. Having some extra cash in the bank means you can splurge on a home energy audit. These range in price from $25 to about $300. The payoff, however, could be thousands of dollars. Ensuring your home is energy efficient, and taking precautions to prevent energy waste, could save you money on your bill every month.
4. Maintenance Projects
Similarly, if you have been putting off a car repair, your tax refund is a smart investment. Rather than letting the problem get out of hand, and buying a new and expensive car, regular maintenance means that you can keep on driving – to work or school. Basic maintenance includes checking or changing the tires, oil, brakes and areas that accrue wear and tear. Many garages will check your car for free, leaving you to cover the parts and labor.
5. Buy Life Insurance
If you have a spouse or family who depends on you for income, then you should have life insurance. You might think this is something only old people get, but the truth is we are all on borrowed time. A work accident, traffic accident, or emergency situation could change your future. Plan for tomorrow by paying off coverage in advance – at a minimum, ensure your health insurance is up to speed.
Leave a comment below and let us know how you plan to spend your tax refund!
