Tax error in your favor: 4 ways to spend your tax refund
Jan. 29, 2018 at midnight
Sometimes it feels like every new piece of email is another person asking you for money. Between utility bills, cable subscriptions and golf club membership fees, opening your inbox in the morning can be a real chore. So, when you nervously open a letter from the IRS to find that Uncle Sam actually wants to give you money — well, it’s easy to find yourself at a loss for what to do with it. Depending on your circumstances and the amount coming back to you, you might want to simply pay down your credit card or college debt, but there could be other ways for you to use that check to improve your day-to-day. Remember, you worked hard for this money — let’s make the most of it with these 4 ways to spend your tax refund!
Life’s little luxuries
You work hard every day to support yourself and your family, and there’s absolutely nothing wrong with being rewarded for it. That charcoal grill and smoker combo your backyard has been missing for years? That pair of designer shoes you’ve been drooling over for months? Maybe now’s the time to fill that new-TV-sized hole in your life
While you might not want to spend the whole amount on a treat for yourself, you shouldn’t cut all the frivolity out of your life — where’s the fun in that? You’ve put in the labor and you deserve a little fruit now and then, and a tax refund could be the perfect way to indulge with money you forgot you’d earned.
Cross it off the bucket list
In 1997, Mary Schmich told us to “do one thing every day that scares you”. For some, this could simply mean driving on the interstate. But whether you’ve written it down or not, everyone has a “bucket list” — a bunch of scary, challenging or unusual things they want to achieve at some point in their lives.
You could be a thrill-seeker who dreams of skydiving over the Grand Canyon or an aspiring traveler who wants to see the Sphinx up close. Even if you just really, really want to go to Disneyland, your tax refund could buy memories that will last a lifetime — what could be worth more than that?
Plan for the future
Saving for the future is often something we neglect, and making use of tax-incentivized retirement accounts is a low-risk way of keeping your money safe and accessible. Take the opportunity to open a traditional individual retirement account (IRA) so your contributions will be tax deductible, or a Roth IRA to ensure your funds are tax-free when you withdraw them. If you’re comfortable taking on a little more risk in return for greater potential returns, you may want to start investing in stocks or mutual funds to make the most of your tax refund.
A house is more than just a home — it’s a financial instrument. Spending money on a remodel cannot only improve the quality of your home-life it can pay for itself in appreciation value when you decide to move. Big jobs like replacing your flooring will improve your home’s energy efficiency and aesthetic value, and can pay for themselves twice over when you sell up.
If your carpets have seen better days (or a few too many spilled wine glasses!) replacing them can breathe new life into your living areas, and modern fibers make them suitable for pets and kids. Hardwood and tile flooring is a great hard-wearing option that has a warm feel under-foot, and is highly-valued at resale. Whatever your budget, investing in new flooring will be one decision you thank yourself for later.
Depending on your tax refund you may want to try some or all of these suggestions, but however you spend it, make sure it’s the right choice for you. Here’s to next year’s tax return!