Be wise. Don’t go out and spend all of that money. Here are some tips on how to make the best use of your refund.
- Pay down debt – Pick a credit card and try to pay out some or all of its balance. Let’s not try to be an overachiever here, focus on just one. Let’s also not try to put your entire refund into it. Allocate 20-40% of your refund to paying down debt.
- Save some money – Put aside 15% or so of your refund. You never know what the future holds so having some funds in a savings account is a smart move.
- Have some fun – Live life and spend a little too. Treat yourself to a massage or a nice dinner, after all, you work hard for your money. Allocate 10-15% of your refund to you.
- Give some money away! – Remember, charitable contributions are also tax deductible, so you will be doing some good and getting a bit of that money back. 5% of your refund should go to doing a good deed. You will feel better.
- Invest it! – Put that money to work even harder for you. Long-term investments are almost always a sure bet on delivering a profit.
- Let’s go back to having fun… Prepay your vacation! – Why pay interest to your credit cards when you now have the funds to pay for it in cash?
Still don’t know what to do with your refund? Sit down, pour yourself a cocktail and think about the possibilities.