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So, you’re getting a refund. Good for you for wanting to find smart and fun tax refund ideas for your money.
Where is my refund? Read on, at the bottom of this post you can use the tool to check the status of your tax refund, before you decide what to do with it.
The Average Tax Refund is estimated at around $3,000, according to US News. That’s a nice chunk of change and it’s worth researching for some ideas.
Getting a tax refund can be exciting, specially if you didn’t realize you’ll be getting one. But, what is the best way to spend this new money?
The first thing to consider is to adjust your tax deductions, this way more of your money goes to your pocket every paycheck.
The second thing is to look at your financial situation and do the responsible stuff with your tax money.
Take a look at your debts, your emergency fund, your children education fund. That’s the responsible and yes boring stuff.
The third thing is to consider some fun. You can use it all for fun, some of it, none of it. Do a combination of responsible stuff plus fun? You do the math.
People are asking each other what are they doing with the tax refunds. I’ve spent some time talking to people and reading some forums to hear ideas.
They’re all over the place on how to spend their tax refunds. Ideas run from investments to expenses.
Some are reducing their debts (credit cards and student loans), some are investing, others are traveling, some are doing nothing with it.
Simple ways to invest your tax refund
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Here is a list of how real people are spending their refund money
I’m just reporting my findings, so that you can get some ideas. These are not my recommendations, just things people are planning to do with their refund money, according to my online research.
1.Nothing. It will go right into my savings account
2.Buy my dog new toys
3.Pay down debt
4.Invest into kids savings accounts and IRA accounts
5.Fix my car
6.Buying an iPhone
7.Household emergency fund
8.Buying new glasses
10.Pay credit card
11.Opeing a small online business
12.Getting new skills
13.Down payment on a new home
15. Getting dental work
16.Gamble in Vegas
17.Getting new tatoos
18.Pay medical bills
19. Home improvement
21.Buy some kitchen pots to cook meals at home
22.Paying student loans
23.Investing it into a craft business
24.Taking a vacation
25.Pay money loaned by relative
26.New car tires
27. Vet’s bills for cat
28.Going to Disney World
29.Saving it to pay next year’s taxes
30.Getting new furniture
31.Splurging on girlfriend for Valentines’ Day
Those are 31 ways people are planning to spend their tax refund on.
Thru my non-scientific investigation, the top 5 ways to spend the refund is on the following.
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Top 5 Ways to Spend your Tax refund
- Paying down debt, student loans and credit cards. Paying down high interest debt is a good move. This can save you money on interest and also help you to increase your credit score. Your monthly payments will be lowered as you reduce the debt balances.
- Creating an emergency fund. Use your tax refund to create or add to an emergency fund. This fund is a savings for special situations such as; loss of your job, illness and unexpected expenses.
- Buying a new car or fixing up old car. If your car is a necessity for transposition to your job, then taking care of is very important. Having your car in good shape reduces the chances of costly malfunctions.
- Dental work ( for some reason lots of people are waiting on a tax refund to do dental work). If you are holding on to get dental work done because you’re not insured, then use your refund to get this done. Dental problems can get more expensive and painful if left untreated.
- Vacations. Mainly to Vegas and to Disney World. Vacations are important. If you can use part or all of your refund to take a trip without incurring new debt, this is a good use for it.
My Recommendations for best ways to spend your tax refund
1.Health. If you have health issues and need the money, use your refund to get healthy.
2. Get your financial independence. Eliminate as much high interest debt as you can with your refund. Taking this action will save you the amount of money you’re paying on interest.
3. Emergency Fund. Saving for emergencies is an essential part of sound money management. Instead of incurring new debt due to an emergency, you can use your cash free of interest.
4. Invest in your skills. Obtaining new skills or improving your skills pays off big dividends. This has the potential of increasing your earnings, either thru salary or side hustling employment.
5. Vacation. Traveling is also investing in yourself. New experiences thru traveling are not only enjoyable, but they make us happy for a very long time.
Still waiting on your refund? Check the status of your tax refund
Where is my refund – If you need to find out the status of your Federal tax refund, check out where is my refund.
You’ll need three pieces of information to obtain the status of your tax refund; Social Security number, Filing Status and Refund amount.
The Bottom line on “how to spend your tax refund” is you have to lay out your priorities. The possible ways to spend this money include investment or expenditure opportunities.
You can be conservative and use your tax refund to eliminate debt, for investment, down payment on a house, an emergency fund etc.
You can be less conservative and do fun stuff; like travel, buy a new car and go shopping.
To maximize the use of your tax refund, take a look at your financial situation’s big picture. If you’re bleeding money on high interest debt, that’s where your refund should go to first.