If you’re getting a Tax refund this year, you probably can’t wait to splurge on a much-anticipated treat, such as a flat screen TV, new shoes, or a vacation. Why not do something else this year? Start a new tradition and find something smart to spend your cash on. The average IRS tax refund in 2015 was $3,539. That’s a chunk of change. These are 10 things you can do with your return that will help you have a better 2016.
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START AN EMERGENCY FUND
For the longest time, I never had an emergency fund. You know, the six months in basic expenses financial experts tell you to sock away. I mean, where on earth was I going to get that kind of money? I was barely making it to the end of the month. Out of necessity, I simply relied on my credit cards (what little space I was able to create on them since the last emergency) as a safety net for when unexpected expenses came up — which seemed way too often. Instead of spending your return on something you won’t even remember in a month, start or build up that emergency fund using a high-interest savings account. Trust me, you’ll be amazed at how much it will grow once you take the initial step and start paying yourself first.
PAY OFF CREDIT CARD DEBT
- The last credit card I paid off while wiping out my debt had an interest rate of 29.99%. Think about all the money I was throwing away each month when I was only making minimum payments on my huge debt blob. With this year’s return eliminate a chunk of your debt — or better yet — get rid of it altogether. You’ll start to see the light at the end of the tunnel and before you know it you will be saving money instead of paying off debt.
UPGRADE YOUR WORK WARDROBE STAPLES
Now, by no means am I saying you should go blow your whole refund on all the clothes, shoes, and accessories that you’ve been drooling over the past year. What I am saying is that it pays to dress appropriately at work. Been aiming for that big promotion? Invest in a new suit or a few key separates (i.e. for women that means a great blazer, pencil skirt and slacks; and for men slacks and a blazer) in neutral colors that can be mixed and matched and worn multiple times in different ways. Looking the part will show your boss that you are professional, that you take your responsibilities seriously, and that you’re ready for that next level.
BUY SOME STOCK
In the audiobook “The Millionaire Next Door” I heard author Thomas J. Stanley tell the story of Teddy Friend, a man who argued that his parents were never able to save because they never earned a high income. However, over a 46-year period, they financed a smoking habit that included 50,377 packs of cigarettes. If Teddy’s family simply invested the money they used to purchase cigarettes during that time, that they would have had a portfolio worth over $2 million dollars.
So, last year I took this all to heart and gave my own weekly two 8-pack of Coca-Cola habit a closer look and started purchasing stock. At the rate I’m going I’m not sure I’ll see the $5 million return I need to retire in style but it sure I’m in a much better financial shape than 12 months ago. Do your research, seek professional advice and be aware of the inherent risk of investing in the stock market. Consider hiring the services of a low-cost wealth management company.
PREPAY YOUR VACATION
- Always wanted to take that trip to Paris? Well, rather than financing your jaunt with your credit card and racking up interest that you’ll wind up paying long after you’ve stopped showing your vacation pics, why not save up for that vacation before you go? You’ll not only be helping yourself financially in the long run, but you will also be stress-free and able to enjoy your experience.
Let’s be honest, you are not going to remodel your home with $3,000. But, you can make small but meaningful improvements that will help boost the value of your home. Whether you grab a few plants and some mulch and spruce up your home’s curb appeal or add a backsplash in the kitchen, you are sure to see a return on your investment. Don’t have $3,000 to blow on your home? Here are 20 WAYS TO REDECORATE/RENOVATE YOUR HOME FOR UNDER $100.
MAKE AN EXTRA MORTGAGE PAYMENT
I’ve been recently dipping my toe into the pool of home ownership — taking a class or two and soaking up every bit of information that I can before taking the plunge. I must say that I was pleasantly surprised to learn that with just one extra payment made a year, your now 30-year mortgage will be shaved down to 26 years.
SEED FUND YOUR OWN BUSINESS
I’m a huge fan of the hit television show, “Shark Tank,” and just love seeing people flex their entrepreneurial muscles and create businesses and inventions they are passionate about. By starting a business, not only are you able to write off some of the expenses, but you are also generating another source of income. Not sure how to start a business on a budget? Learn “How To Turn $5 Into Your Dream Company.”
GET SOMETHING YOU NEED
In serious need of a new set of tires? Have you been putting off seeing the dentist about that sensitive tooth? It pays to take care of things you or your family really need while you have the money. Take care of it now and eliminate the risk of having to deal with a bigger emergency later.
Also read: How can a Tax lawyer help you plan your Taxes.
INVEST IN YOUR CAREER
I firmly believe that we should take risks, believe in ourselves, and never stop learning. I personally try to live by the mantra to always “bet on me.” After all, if I don’t, who else will? So whether it’s an online certification you’ve been wanting or a course to learn a new skill held at your local college, do it. Investing in yourself could be the most profitable investment you ever make.
Captain Money Tip: Think tax refunds are cool? They are not. Why Getting A Tax Refund Sucks.”