Tax season is almost here, and with it, hopefully a nice bit of extra money in the form of a tax return. A lot of people take this money to go buy something fun, but there are more practical uses for it. Consider these five sensible alternatives to squandering your tax return.
Put It Away in Emergency Savings
Everyone should have an emergency savings account. Although it can be tempting to neglect them, they serve an important purpose. Emergencies happen, and you need to be able to pay for them. Take some of your tax return money and put it aside for a rainy day. When an emergency does occur, which it will, you will have something to fall back on.
Pay Off High-Interest Debt
High-interest debt should be paid off as quickly as possible. This typically includes things like credit cards and payday loans. This kind of debt is costly to carry around and can seriously impact your credit score, making it more difficult to get important loans in the future. While high-interest debt should be your priority, paying off any kind of debt is a good idea so you will not have it hanging over your head and costing you interest.
Invest in a High-Yield Savings Account
Putting money into a high-yield savings account will garner you more money over time. This can help you save for future expenses such as a new car, your child’s college education, or retirement. Your tax return is then put towards something useful in the future rather than the instant gratification of spending it now.
Make Home Improvements
Home improvements can significantly increase the value of your home. They can also make it more comfortable for you and your family to live there. Consider projects you have always wanted to do, and with the extra money you receive from your tax return, get them done. For example, timber decking can add a nice space for you to entertain guests and look very stunning on your home.
Donate to Charity
There is no shortage of people, animals, and other causes in need of aid. Consider giving your tax refund to a worthy cause. Donations to most charities are tax-deductible, which can save you more on next year’s taxes. Aside from that, it will feel good to know you helped others in need. While it’s not wrong to spend money on things you love, you may find even greater satisfaction from donating that money to those in need.
There are endless exciting ways to spend your tax refund. However, you may want to look into more sensible choices. Any of the above ideas are good alternatives, but they are certainly not the only options. Try to make a thoughtful decision about what you do with this year’s tax return. That way, you won’t find yourself burdened with buyer’s remorse.