If you’re one of the lucky people to receive a tax return, before you spend the money frivolously or just throw it in the bank, consider some alternative options. Although it would be nice to book a plane ticket for a vacation or buy something expensive and shiny, there are more responsible options that will be more beneficial to your financial health and well-being for the short and long-term.
Pay off debt.
Use your tax return to allocate toward paying off any debt you may have. This could be credit card debt, student loans, medical debt, and beyond. Using this money to put toward some of your debt will help you with paying it off quicker. Start by putting money toward the loan with the highest interest rate.
Take this money and invest it into your future. Whether that means you work with a financial advisor to start an investment portfolio for the long-term, or you purchase a house to invest in your home life and family. If your current home needs some improvements, you could invest this money into those projects, as well.
Fund a goal.
Using this money to fund an account to help reach a goal is incredibly beneficial. For example, putting this money into an account for future college tuition (for yourself, a child, a family member, etc.), adding to your retirement account so you’ll have more available funds when you retire, or using it to support a cause/organization you care about.
Start a business.
Take your side hustle to the next level by starting a full-blown business. Depending on where you’re at in your business plan, this money could be used for a variety of things - renting/buying a space for your business, starting a website, purchasing bookkeeping software, buying more supplies for your products/services, and more. Consider all the avenues and where your money would be most useful.
Whatever you choose to do with your tax return, we recommend you do your research and weigh your options prior to spending the money. For questions or assistance with deciding what to do, reach out to a trusted professional for their insight.