Tax time is quickly approaching. Those who anticipate getting a large tax refund will be anxiously waiting to file their taxes, while those who anticipate owing money will be holding off until the last minute.
Regardless of your opinion on whether it’s wise or not to get a tax refund, there are a lot of people who do.
In fact, this will be the first year that I may end up owing income taxes, rather than getting a refund. This used to be the time of year when I would scheme about all the ways I could use the extra money.
If you’re anticipating getting a large income tax refund, here are five smart things you could do with it.
1. Pay off debt
What better way to spend a lump sum of money than to pay down debt? If one of your New Year’s resolutions is paying off debt, taking advantage of your refund is a great idea. You’ll get a head start that will hopefully allow you to accomplish your goals this year.
If you’re in debt, this is probably the smartest thing to do with the extra money.
2. Fix up your home
I love updating my home. I especially love seeing how much I can get out of a small budget. I’ve used income tax refunds a couple different times to breathe new life into an old room.
If you’re willing to get your hands dirty, you could make your tax refund go pretty far.
3. Grow your savings account
If your savings are running low, you could stash your money in the bank. Consider increasing your emergency fund, or putting cash toward a new savings goal.
4. Take a vacation
In the past, I’ve used my refund to go on vacation. My entire family went on a trip to Virginia Beach a few years ago — funded by my refund.
If that feels frivolous, you could just put a portion of your refund towards a vacation, and use the rest to fund other savings goals.
I’m guessing you’d probably agree that investing refund money is a smart idea. Because it is!
If you have a hard time reaching the maximum contribution limit on your various retirement accounts, your refund could give you the boost you need this year. And if you haven’t started investing, using refund mon ey would be an easy way to do so.
If you got a large income tax refund, what would you do with it?