It’s some people’s favorite time of the year… tax time! All I see on my timeline are memes about getting W2s and how excited people are to get these mega refund checks. For anybody getting a refund check, let’s talk about some productive ways to utilize that money.
*Pause*
Before we get into what you should be doing, I want to start off by saying don’t blow your money. If you got thousands of dollars last year and can’t remember what you did with it then I’m talking to you! If you went and bought a bunch of unnecessary clothes, shoes, makeup, etc then I’m talking to you. Okay, now that we got that out of the way, let’s talk about what you should be doing.
1. Pay off some debt
This is a great time to knock out some debt, especially high interest credit cards. Instead of making minimum payments and wasting money on interest, go ahead and pay it off. Student loans, car notes, and payday loans are other types of debt you can pay off with your refund checks. Pay your car note or rent up for a few months.
2. Increase/start your emergency fund
This is a perfect time to set up or add to a rainy day fund. If you don’t have a emergency fund, you need one! Emergencies always happen and being prepared will make those emergencies turn into a quick inconvenience. It’s never a bad idea to save money. Open a new account and don’t get a debit card for it. This will make it easier to leave the money alone.
3. Invest in YOURSELF
Yes, start that business that you’ve been thinking about starting. Take that course or class you’ve been wanting to take. Go take a class that will help you in the future. Attend a conference in your industry or the industry that you want to be apart of. Hire a career coach or mentor. Buy some new books.
This is a great use of your money because it could lead to more money in the future. For example, if you are a hair stylist and you take a class to learn a new technique or skill it will lead to more money. If you learn a faster way to do something, now you can see more clients in a day. If you learn to do something better, you can charge more for your services.
4. Invest financially
Invest in the stock market or in retirement accounts. Millionaires love the stock market because it grows their money. Why not use it to grow yours? Open a Roth 401k or Roth IRA if you don’t have one already. A roth account is a great additional account to add to your portfolio. The more retirement accounts, the better!
This is also a great time to open accounts for your children. What if you started an account for your children and let it grow over time? What difference could you make if they had a nice nest egg to begin their life with at 18. I recently read a story about a family that put their child’s money in mutual funds since birth. All birthday money and gifts went into the account and has grown greatly. That child is 16 years old with about $60,000 and bought their first rental property. (Obviously it’s in the parents’ name but they used his money.) He’s now collecting rental income and working on getting his second property. He’s not even 18 and better off than most adults!
*quick side note*
Tax refunds are not “free money.” It means you are overpaying throughout the year. I think this is important to bring up if you feel like you are living paycheck to paycheck and waiting on a refund every year. You should look at your information on your W4 and get your money throughout the year instead of getting a refund.
I know some people prefer it that way and that’s totally fine. Do what’s right for you and your family.
Back to your regularly scheduled program
Do something productive with your money. Don’t just look at it as extra money that you can blow on stupid stuff. Make good decisions this year and this decade. Most people started off the year with lots of goals. Use this money to help you achieve those goals.
Great info!
Thank you!