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Depending on how you paid for your college classes you may receive a refund check sometime during the semester. The factors will vary if you receive a refund. It depends on a few things such as the amount of financial aid that you have accepted or the amount of classes that you are taking. A lot of refunds come from student loan money that you do have to pay back. A refund of a few thousand dollars for a student that is 18 or 19 years old may be too much to handle. A person at that age may not have ever had that amount of money at one time before. I have comprised a list of things you should and shouldn’t do with your refund money.
I will start off by listing the don’ts.
Buy a New Car
Don’t buy a brand new car. It makes no sense to use your refund money for a car with payments that you probably can’t afford as a college student. If you need a car that bad, you can go with something that is used and reliable. It will be MUCH cheaper. You can check used car dealerships and pay for the car in cash. Make sure that you have a mechanic with you to check the car for any problems. You can also check Craigslist. You may be able to find a great deal over there.
You don’t have to go on a shopping spree. I have seen people blow refund checks at the mall for the latest Jordan’s or the newest outfits. There is nothing wrong with buying a shirt or two, but don’t go overboard. If you spend all of your money on gear, you’ll be back broke. It’s best to have some of that money for a rainy day.
Don’t try to impress people with your refund money. People may use the refund money to portray something that they are not. Don’t do it. Keeping up with the Joneses isn’t good. At the end of the day, they are probably broke. If you have to spend money to impress people, then those are not the type of people that you should want as friends.
Those were the do’s and here are the don’ts.
Save a portion of it. You will need money throughout the year. If you’re not working, your refund check can go to expenses that may come up. You can open a savings account specifically for the refund. It could be a college emergency account. You only touch the money if you really need it.
Invest the money in something. You can invest the money in a mutual fund or something of that nature. If you have a small business, you can also invest in that. When I was in college, investing was not even on my radar. I blew it. My money would have grown so much over time. If you are in school, consider investing. One company that you can consider investing is Stockpile. With this platform, you can buy whole and fractional shares of stocks. They are giving new members $5 worth of stock. Go here for more details.
Pay off Debt
The next thing that you can also pay off some outstanding debt. Paying off debt is good. It will be one less thing to worry about as a student. This is another instance where I wish that I could go back in time and listen to my own advice. I don’t want anyone to get in debt if they can help it. Your future self will thank you if eliminate some of your debt.
Send it Back
If your refund is from student loans, you can send it back to the lender. By doing that you won’t have to pay as much after you graduate. This is something that I wished I would have done. I know that my loans would be much lower than they are now.
These are just a few of the do’s and don’ts of how to spend a refund check. Do you know of any other ways? Feel free to comment below.