Stephanie James

It’s the most wonderful time of the year — it’s time to get your tax refund! Now, before you burn a hole in your pocket, remember that the government isn’t giving you a gift or “free money” — this is money that should have been yours all along, so give it purpose, and spend it wisely. Maybe there’s been debt hanging over your head, or you have something in mind that you’ve been needing, or putting off on purchasing. Whatever it is, this is the perfect time to take care of your personal and/or financial needs. Still stuck on what to use your tax refund for? Below are a few smart ways [Path.Money]( recommends you spend your newfound wealth!

1. Set Financial Goals

If you won the lottery tomorrow, do you know how you would spend it? Perhaps you’d take a cruise through the Caribbean, invest in the stock market, or even quit your job! If you haven’t done this already, layout a blueprint of your financial goals and how your finances will sustain your life and future. Having clear visuals of what your long-term financial or life goals are, will be the first step in helping you navigate where to invest your current tax refunds.

2. Pay Off Debt

You might be a big spender, and tempted to use your tax refund on buying that new flat screen tv that you’ve been wanting. However, consider using it to pay off any high-interest debt that you’ve acquired, like student & car loans, or credit card debt. If you fit into this category, you’re not alone. Unfortunately, the average American is $38,000 deep in personal debt. It’s best to get these debts taken care of as soon as you can, as it’s easy for them to accumulate or gain interest, fast. If you are living with debt, consider putting your tax refund directly into that account.

3. Start the College Fund

It’s never too early to start investing in your child’s (or future child’s) college fund. College is becoming more competitive, which also means more expensive. Today, more than 70% of college students accumulate significant student loans, crippling their finances immediately after graduation, so get a head start to avoid the panic later.

4. Home Improvements

If there are some home updates you’ve been putting off, this might be a great opportunity to get a few things done around the house. From replacing your mattress or carpet, updating your kitchen, and/or hiring a cleaning service to come in every week, your refund money can go a long way in your home. Many people overlook the importance of home maintenance, and it ends up costing them thousands of dollars in updates or repairs later on. Be proactive, and think about using this to keep your home in mint condition.

5. Start A Business

Do you have another passion or hobby outside of your job? This might be a good time to start seeding those business prospects you’ve been thinking about. More and more people are becoming entrepreneurs, and there are endless tools to get your business seed planted. If it’s not a business prospect, is there something that brings you joy, or helps you recharge after a long work week? This is a great way to spend your tax return, especially if you do not have any finances holding you back!

6. Fund Your Retirement

Sometimes it’s hard to focus on retirement when you’re at the beginning, or peak, of your career, however adding to your retirement fund is one of the smartest investments you can make (and the sooner you start, the better). Don’t know where to begin? Find some great tips here!

7. Start An Emergency Fund

Consider adding to your secret stash of cash with the money you’ve received from your tax refund.. Financial peace of mind is priceless, and it’s always a great idea to have an emergency fund handy for an unexpected expense -- such as an unforeseen job loss, home repairs, or injury.

8. Invest In Yourself

Another great idea for your refund is to spend it on things that will improve your health and/or overall well-being. Maybe it’s a gym membership, a monthly spa membership for unlimited massages for your back pain, or a long overdue vacation to a tropical paradise. Whatever it is, make sure you are making yourself and your personal health a priority as well!


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