By now most people have filed and received their tax refund. In fact, I can remember trying to file as early as possible when we knew we were getting a refund.
While it can be tempting to blow your tax refund on fun and entertainment here are five smarter ways to spend your money.
Pay off lingering bills
If you are still paying for that furniture set or washer and dryer from nine months ago, put your tax refund to work for you. Paying off your revolving debt will free up extra money every month for you to save towards other expenses, investments, or family fun.
Invest in your home
Do you have an old, rotting tree that needs to be cut down? Is your refrigerator on the fritz? Has your carpet seen better days? Repairing or replacing items in your home before they completely stop working can actually save you money in the long run.
Home improvement projects such as getting an air conditioner tune up, replacing light bulbs with LED’s, or installing ceiling fans are great ways to invest in cost saving, environmentally friendly improvements to your home.
If you own your home, certain repairs and upgrades can actually be a tax deduction if you ever sell your home.
Build your credit
For my children, tax refunds can be a great way to build credit. My son doesn’t have any credit cards, because he’s not the best budgeter. However, he can use his tax refund to apply for a Discover it® Secured Credit Card.
The credit limit on a secured card is equal to the deposit on the card, so it helps him learn good spending habits because he can’t spend more money than he has.
The Discover it Secured Card offers 2% cash back at gas stations and restaurants and 1% on other purchases. There is no annual fee, a fraud liability guarantee, and the same awesome Freeze ItSM feature, which can help prevent new purchases if your card is lost or stolen.
It’s never too early or too late to start investing your extra money. We have several Roth IRA’s as well as a traditional IRA. It’s nice to build up your retirement accounts (or emergency fund) with a big deposit once a year.
Start a business
Last year I started a business with a $1,500 investment (which is about ½ the amount of the average American tax refund). With a lot of hard work, I was about to turn that $1,500 into a $100,000 business by the end of the year.
If there is a business that you have been thinking about starting, using the extra money from your tax refund can be a great way to get started.
Remember, while it might be fun to brainstorm ways you can blow your tax refund, making smart decisions with your money will improve your financial future.