A couple of weeks ago I wrote a post titled 5 Dumba$$ ways to spend your tax refund. It was very popular. People agreed that the ideas listed were not the best ways to spend a refund. If your Taxcaster tool lets you know you are getting a refund, this post lists four smart things that you can do with it.
1. Pay Off Debt
The 1st smart thing that you can do with your tax return refund is to pay off debt. I’m not a fan of debt at all. It can stop you from doing a lot of things if you let it get out of control. Certain types of debt collect interest which makes the amounts higher to pay off over a period of time. Using your tax refund to pay off debt might be tough at first (especially if you have a lot of it), but in the long run, it will be a great move. A couple of years ago, I used my refund to pay off a small loan that I had. Sometimes you have to do what you have to different things to get rid of that debt.
2. Start a Savings Account
The 2nd thing smart thing that you can do is to start a savings account. If you already have one, add some of your refunds to it. You would be surprised at how many people don’t have a savings account. I worked at a bank for almost two years, and I would say that about 40% of my customers didn’t have one. For the people that did have one many didn’t even have at least a hundred dollars in there. It’s time to get a hold on your finances and get this account going. You can start your account with an online bank, or you can go to your nearest credit union or bank.
The 3rd thing that you can do is to invest your tax refund. I’m still learning about investments, but my friends at Modest Money have a lot of useful information on the topic. They talk about everything from stocks to peer to peer lending. Check out their site when you get a chance. You can also check out Loyal3 and Robinhood. I recently opened accounts with them. You can expect a review about both of them sometime in the near future.
4. Start a Business
The final smart thing that you can do is to start a small business with it. The opportunities can be endless depending on your refund. You can start some businesses with as little as five hundred dollars. Do your research, plan it out and make it happen. If you’re refund isn’t that big, you can at least purchase some things and start a side hustle.
To summarize my points, the four smart things to do with your tax refund are:
- Pay off debt
- Start a savings account
- Start a business
If you’re getting a refund, what are some smart ways that you plan on spending it? Do you know of any other ways that I didn’t list? Please comment below.