I have been getting questions lately on what people should do with their tax money, so I wanted to compile a list of some of my favorite tax money moves:
PAY OFF DEBT
OMG! This is my personal favorite way to use my tax money because that is currently where I am in my money journey. I throw almost every single penny towards debt now. Why? Because I have a goal to accomplish! When it comes to my goals, I am all in 100% until it is completed. So, yes, I probably could spent my money on other things but debt payoff is my top priority so it goes there.
Pay up your rent
If you are renting your home, put that extra money towards paying up your rent. When I was barely making it, I would take my refund and pay my rent for 3-5 months. It was such a relief to have one of my most significant expenses taken care of so I could finally breathe a little bit.
Buy that car
I see people getting a lot of flack for buying a car with their tax money. I am here to say, that is an excellent way to spend your tax refund if you have a car that is barely making it. No, I don't want you getting a car loan but if you have enough of a refund to pay cash for a car and you need one, do it! There is no shame in doing that, and it's actually a smart thing to do. Then you won't have a car payment like everyone that is talking junk about it!
Build up your emergency fund
I always recommend that people have at least 3-6 months worth of expenses saved up in case the unexpected happens. You lose your job, or you have a big car or home repair, you can cover yourself without going into debt. A tax refund is a great way to get a headstart on that emergency fund. I recommend finding a high-interest savings account for housing it such as Ally or Marcus bank. Once it is built up, only use it for EMERGENCIES!
You knew it was coming! Of course, I am going to say invest because that's how you can make money with your money. Open an account at Charles Schwab, TD Ameritrade, Fidelity, or another online broker and start investing! Find some low-cost mutual funds and let the money just sit. Don't take it out or check it every day, just out of sight out of mind until it's time to rebalance your portfolio.
Yes, all of the other points are important but what is the use of money if you can't enjoy it. Take some of your tax refund and just enjoy yourself! This year, I bought some clothes for the kids and me before I started tackling debt. It is ok to spend it on something for you and not feel guilty about it. Money can only be spent once though so don't get crazy. LOL!
All of these ideas are great ways to use your tax refund. What you choose to do is based on where you are in your financial journey. What did you do with your tax refund this year? Do you have any regrets? Let me know in the comments.