The April 15 deadline for filing your taxes is fast approaching. While most people could do without the paperwork, nearly half of taxpayers have a refund to look forward to. There’s no “best” way to use a tax refund, but there are some smart ways to make your refund check work for you.
Here are some of the best – and most common – ways to use your refund check:
- Add to savings. This is the most common option, with 47 percent of refund checks going toward savings. This could mean adding to an emergency fund, starting a retirement fund or putting money aside for your children’s education.
- Put money toward a goal. This is more than just adding to savings. It’s saving up for a specific, short-term purpose. Start setting money aside for a financial goal like a new car, a summer vacation or a down payment on a home.
- Pay off debts. This is the second most common way to spend tax refunds, with 44 percent of refund recipients opting to pay off some debt. For many, this means paying off credit card balances, but it can also mean making an extra mortgage payment, paying off student loans or otherwise downsizing debt.
- Improve yourself. Have you always wanted to take a class at the local community college or earn certification in a work-related topic? Do it now, while you have extra cash on hand.
- Improve your home. Weatherize your home, complete a home improvement project or fix problems around the house. This has the added benefit of increasing your home’s value.
- Fix your car. Get any necessary repairs, get an oil change and replace your tires. Spending a little money now can prevent costly problems in the future.
- Travel abroad. This is a particularly good option if you’re still in school. By studying or traveling abroad, you can develop new and unique skills that could be valuable in life.
- Take extra classes. If you’re a student, consider using your tax return to pay for an extra class. The extra money could also allow you to cut back work hours to make room for additional coursework.
- Invest in your health. Use this opportunity to take care of yourself. Join a gym, visit the dentist or make an appointment with a chiropractor. You can never go wrong spending money on your health.
- Give money to a cause. If you’re one of the lucky few and have all of your financial needs covered, consider using your spare cash to help someone else. This can be anything from giving to a favorite charity to contributing to a relative’s college fund. Depending on what you do with the money, your gift may be tax-deductible.
Whatever you decide to do with your extra cash, use it wisely. It’s the best opportunity you have each year to set aside a big chunk of money for savings, paying bills or taking care of other financial expenses.