Last year the average tax refund was more than $2,500 and nearly 80% of people are expected to receive a tax refund. Often times, the money is used on a one-time splurge, but there are ways to make the money work for your benefit all year long.
Here are some ways to spend the money so it can make a positive impact in the long run
Plan For Your Family
• A tax refund would make nice seed money for your kids’ college or for an emergency fund.
• Sometimes the first step is the hardest, and just having a healthy start will help you continue to put money into the fund.
Home Dining Options
• Last year, for the first time ever, people spent more money eating out than on groceries. (Source if you choose to use stat: Commerce Dept.)
• You could use the tax refund to purchase a tool or appliance that would encourage you to eat home, which means you’d save money all year. What about an espresso machine to cut down on trips to Starbucks, or a deep freezer to store more meals, or upgrading your grill?
Protect Your Home
• You can use your refund to protect your home from a natural disaster.
• A study found that only 12% of homes have a portable generator. If a storm hits and you lose power, it can be costly, so this type of investment could really pay off. (Source if you choose to use stat: Generac.)
• Whether you rent or own your home, this is a good time to look at your insurance and buy additional coverage if needed.
• Making an investment in your home can increase the value.
• I’m not talking about major expensive renovations. Studies show that upgrading elements like doors and siding have a greater financial return than adding on. (Source if you choose to use stat: Remodeling Magazine.)
• Spending your tax refund to make your home more energy efficient, when it comes to air flow, light bulbs and water flow, will make a difference in your monthly budget all year long.
• This may not sound like fun, but it will impact you all year. If you pay off debt with your refund, you won’t be wasting money paying interest charges.
• If you’re dealing with multiple credit card balances, I recommend getting organized with a debt worksheet, like the one on my website, dursocapital.com.
• Make sure to make your minimum payments on each card, but devote as much as you can to the card with the lowest balance. Once that one is paid off, turn to the next lowest balance. Each time you can cut up a card, you’ll gain momentum that will help you reach your goal.