8 Smart Ways to Use Your Tax Return Refund
You dutifully filed your taxes by April 15th, and now you’re waiting for Uncle Sam to deposit that extra cash into your account. While it may seem like a license to splurge on that new pair of shoes or a trip to your city’s hottest new restaurant, do yourself a favor and think smart when it comes to your tax return refund.
How Many Americans Are Getting a Tax Refund?
According to The Motley Fool website, about half of all Americans will receive a refund in 2017. The highest percentage of those lucky guys and gals fall into the Millennial category, with 66% of those who filed seeing some cash coming back their way. Approximately half (49%) of the Generation X category of taxpayers will get a refund. Unsurprisingly, as your age category goes up, you’re less likely to see money back from the government: only 34% of Baby Boomers will get a refund.
How Do Most Americans Spend Their Refund?
While you might think a windfall from your return is a cause for most people to splurge, today’s economy says different. Bankrate.com, who’s been studying the tax return spending habits of Americans since 2010, says their research shows only 6% of U.S. adults who are getting some money back from the IRS are planning a vacation or shopping spree. Instead, the highest rate of Americans since the study began are planning on spending it on things they need, such as bills or food. Additionally, 34% plan to save or invest it, while 27% will use it to pay off some of their debt.
What Should I Do With My Tax Refund?
Here’s some unique ideas of what you can do with that tax refund, other than reworking your wardrobe:
- Start an Emergency Fund. Unexpected car repairs, getting laid off from your job or even medical bills can jump out at any time. Having a cushion can be crucial.
- Invest in Your Retirement. OK, we know it’s not the sexiest thing you can do with your money, but you’ll appreciate it in the long run.
- Increase Your Education. Learn more about a hobby you love or more skills for the job you want to move into. Knowledge is power.
- Donate to a Charity. Give some money to a cause you love. Even a small amount helps.
- Upgrade Your Apartment. Need more space? How about just giving your current apartment a new look? That return can make that possible.
- Change the Way You Eat. If you have a pantry full of ramen noodles and stale tortilla chips, now’s your chance to invest in the good stuff. Maybe even take a cooking class?
- Pay Off Those Credit Cards. Start with the high interest ones and work your way down. Your monthly budget will appreciate it.
- Take Some Time Off. Take unused vacation days and go somewhere you’ve always wanted to. You’ll be more rested and more productive upon your return.
What are you planning on doing with your tax return? Did you even get one this year? Get chatting below!