What to Do With a Tax Refund
So you’ve already filed your 2017 tax return and you’re getting your refund. Congratulations! (And it’s good that you’ve done it before – you’re less likely to fall into the trap that way .) The average amount, according to the IRS , is over $ 3,000, which is kind of a bit of a surprise.
Maybe you’ve been eyeing a fancy skincare product or treating your SO at night and you finally have the means to do so. This is great, but my job is to remind you that there are other “responsible” things you can do with this money. Like this.
Save it
Nearly 60% of Americans surveyed by GoBankingRates had less than $ 1,000 in their savings accounts in 2017. It’s not very good! You’ve heard this before: Accumulating a cash pillow is one of the most financially responsible things you can do, and you need to save three to six months of expenses. Save your tax return for this year and you get a lot closer to it.
If you’re comfortable with your savings, channel them into one of your financial goals , such as down payment, college, or vacation. Open a separate savings account (preferably with a high yield) and keep it there until you have accumulated enough. This is the most boring option, but I’m going to do it with mine.
Invest it
Maybe you want to take advantage of record gains in the stock market. This is a pretty good idea and you have more opportunities than ever to invest in your own way.
If you are new to investing, we have tons of explanations on how to get started:
You may want to consider an IRA:
Or influence investment:
Or robo:
Or weed:
Or crypto:
There are almost too many!
Pay the debt off
My two cents (heh): first pay off the debt with the highest interest rate, such as a credit card. “The quickest way to end your debt drama and get out of a long treadmill is to devote your resources to paying the bill with the highest interest rate while paying the minimum required on the rest,” write Heline Olen and Harold Pollack in The Index Card. …
But this is easier said than done, and if you have large accounts it can be demoralizing, especially if your income does not cover the entire balance. Alternative: Pay off the smallest balance in full, regardless of the interest rate, and then the second smallest balance, etc. This method , known as the snowball method , is effective because it can seem more manageable and gives people a sense of progress. You will know which method is best for you.
Donate part (or all)
There are about 1 million reasons requiring your attention right now. People are crowdfunding their medical bills. Reproductive rights and immigrants are at risk. Schools cannot afford to buy the necessary school supplies for their students. Use your unexpected small amount to donate to a cause you believe in but put off when your wallet was a little lighter.
Spend it on something fun
All that said is your money. Whether you want to buy a new coat, a video game, or a secret bitcoin box , who am I to stop you. You deserve to have some fun every now and then. Just don’t waste everything in one place. Or do it. Again, this is your money.