What to do with Your Tax Refund

When you get a tax refund, especially when you get one for the first time, it’s easy to get excited and to go “spend crazy” buying whatever you want.

And, while it’s okay to splurge a little bit if your refund is large enough, there are actually much smarter things that you could do with your money.    

Here are some ideas.

Pay Down Your Debts

While it may not be fun, one of the smartest things that you can do with the influx of money come refund time is to pay down your debts.

If you have debts you can pay off completely, do it! Even if that’s not possible, just paying as much as you can, particularly on the debts that are affecting you the most negatively, can have a big and majorly positive impact.

A good idea is to comb through your credit report with a financial advisor to determine which debts need the most immediate attention.

Stash Some Emergency Cash

If you’re like most people, your first instinct when you get extra cash is to spend it, but that may not be so smart.

Instead of spending, consider stashing. Whether you save the money as cash or put it in an emergency savings account, it’s good to have some money on-hand for those unexpected situations.

A car that suddenly needs major repairs, for example, is going to set you back some cash, but you won’t feel the blow quite so much if you’ve got some emergency money on hand to cover the costs. Having that “safety net” of money can really keep you from reeling from financial blows when they come.

Invest

Something else you can do with your refund is to invest it. Whether you want to play the stock market, open up a retirement savings account, or try out a new business venture, investing, if you do it wisely, can grow your money.

Before you invest, though, it is always a good idea to speak with a financial professional about your current situation, your future needs and goals, and the best investment options for you and your needs.

As you can see, there are much better things to do with your refund than just blowing it, so try to put these tips into practice. You’ll be thankful you did later on down the road.