7 awesome ways to spend your tax refund!
Many of you have already received your tax refund for this year. What did you do with that money? Use it to start your 6-month emergency fund? Pay off credit card debt? Used it to start a business? I hope you did something smart with at least half of the money you got back. If you keep using your money to buy frivolous things that won’t make your money grow, then next year when you get your taxes back and you see how much you made, you will continue to wonder “where did my money go?”
If you don’t start to save and invest your money, you won’t see any of the benefits now or in the future. Yes those shoes look lovely on you my dear, but how does your bank account look? How do you plan to make your money grow this year? Next 5 years? Next 20 years? How much money each month are you putting aside for retirement? These are the important questions you need to ask yourselves.
I seriously had to ask myself those same questions. After years of collecting clothes and shoes (I’ve gotten so much better), I had to stop myself and ask: What do I have besides these material things? What is my net worth? How can I change my financial habits and start to actually make my money grow? 2 years ago I used part of my refund to open up a brokerage account and start investing my money. It’s been great being able to see my money grow.
I was listening to a video, from life coach Toni Robinson a few weeks ago and he brought up some really great points:
“You invest so you have an income for the rest of your life without working. Spend less than you earn. Invest the difference, and then reinvest it. We make things more complex than it really is. You must pick out a minimum financial goal, specific amount of your income that you will invest; each month, each year. If you are going to change things, you have to put yourself in a position where you are investing a certain amount each month. Paying your investments before your bills, have it automatically drawn from your accounts. Success in life comes from good judgment and decisions.”
Everyone can do it. All it takes is having discipline. I believe in all of you! Don’t let another year go by without having proper destinations for your money! I’m not saying you can’t use some of your money to treat yourself, after all it is your hard earned money, but just be smart about it.
Here are 7 great things you can do with your tax refund. Be sure you budget out how you will spend your tax refund before the money hits your account. Sometimes if our money is in a checking account we assume that money doesn’t have a purpose and we’re allowed to spend it as we please. If you know how much money you will allocate in other places ahead of time it will be easier not to spend your money frivolously.
- Pay off credit card debt- Which cards should you pay off first? Some people recommend paying off the credit card with the highest interest first, while others recommend paying off the credit card or store card that has the lowest balance first. This way you can knock out one bill at a time and can create small wins. Since you have a larger sum of money I would recommend getting rid of the card or cards with the highest interest rate to save yourself from getting charged 16-18%.
- Rebuild emergency account- it’s recommended that you have at least 6 months of all your monthly bills set aside in a separate account just in case you need it. You emergency account may be running a little low especially if you dipped into it for Christmas gifts, or needed to use the money to pay off your credit card balance. Whatever you used the money for use part of your refund to build this account back up.
- ROTH IRA- You can never have too much retirement money, even if you’re signed up with your companies 401k a Roth IRA is still a great investment to have. A Roth IRA is another great bucket to house your investments. It’s an investment vehicle where you can buy stocks, mutual funds, bonds, real estate or just hold cash if you wanted to. IRA stands for individual retirement account. You won’t receive a tax deduction on the money inside your ROTH IRA; however once you retire you will be able to take out your money without paying any taxes on it. Simply put the money in this account is taxed in the beginning.
- Vacation account- Instead of swiping your credit card for that vacation how about you start saving for it early. That way when you do swipe your card you will be able to pay the balance in full that month and not have to rack up interest fees. I know a vacation is the first thing on my mind especially with all this snow we’ve been getting in Boston lately. I see myself on a beach in the very near future.
- Classes/ conferences-Is there a course that you’ve always wanted to take? Maybe you want to perfect your pubic speaking skills, or open up your own small business. Whatever it is you want to do I’m pretty sure there’s a class you can take to learn more about it. Conferences are also great too for networking and learning. Just because you’ve graduated school doesn’t mean that you’re done learning. You must continue to educate yourself and adding new skills to your resume.
- Fund a taxable account- This is another investment tool that lets your money grow for many years. There are tons of stocks, bonds, and mutual funds to choose from. You don’t have to be rolling in dough in order to start investing. Every little bit of money adds up.
- Treat yourself– You’ve worked hard this year take a little bit of that money to buy yourself something nice.
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