For a lot of people, tax refunds feel like free money. While most folks expect to get something back after giving what they owe to the government, at the end of the day, the money you’ll get back is still an amount that you’ve already written off as gone. Getting it back is just a bonus even if it’s your money to begin with.
Because of this, investing this amount is always a good way to “spend” it. This can help you make the most out of your ‘free money’ or even grow it, depending on what you want to do. But what exactly can you do to spend it wisely?
To give you an idea on what you can do with your tax refund money, here are a few ways how you can put it away wisely:
Get a good mattress
When it comes to investing your money, the first thing that comes to mind are the things that are about to be mentioned below but this is a very good one as well. Buying a good mattress is an investment for yourself as it can help you sleep better. Getting better quality sleep, in exchange, will be highly beneficial to your health. And since health is wealth, it’s one of the best things to invest in.
Since mattresses are typically big ticket purchases, they’re often considered as investments for the home. However, lots of people tend to neglect the health benefits they can come with as it’s also very common for people to neglect their sleep. Hustling often comes with a major sleep debt, so there are folks who aren’t too keen on spending money on their beds.
While a good mattress will not automatically improve the quality of your sleep, it can entice you to spend more time in your bed. This, in turn, can push you to sleep more which is always good if you hardly ever get 7 to 8 hours of nightly shuteye.
With better quality sleep, your immune system can be boosted, your mood will improve, you’ll feel more energetic, and your weight loss efforts will be more effective. Not a lot of other things can offer the same range of benefits, so you should take it into consideration.
Buy into the stock market
Investing in stocks is one way to grow your money without exerting a whole lot of effort. This doesn’t mean that trading stocks is something easy or fuss-free because it’s certainly not but there are ways to simplify it. And through this, you can grow your ‘free money’.
The good thing about using your tax refunds in starting out in the stock market is that the losses might not hit you as hard as opposed to using your savings to buy stocks. As there are substantial risks in this activity, using the money you haven’t earmarked for anything else might help you avoid feeling bad if you happened to lose some in the process.
Pay off high-interest credit card debt
Operating on the idea that your tax refund is not earmarked for other things, another good way to ‘invest’ it is by paying off debts, especially high-interest ones. Taking out a chunk from your high-interest credit card bill will go a long way as it can help you slow down your interest growth.
Since you’re not really planning on spending your tax return on anything else, doing this can be a wise move. You still need to pay the amount you owe anyway, so why not make a dent in it with the money that you don’t necessarily need to be liquid as of the moment. This will contribute to improving your financial situation.
Invest in your career or business
Investing in yourself or your business is also a good way to make the most out of your tax refund. You can use it to pay for professional classes or seminars that will let you enhance your expertise in your field and pad your resume. You can also add it to your business’ fund if you wish to.
Open a high-yield savings account
If you’re not sure where to put your tax refund money, you can always deposit it in a high-yield savings account. Putting your money in the bank is always one way to keep it away but these kinds of savings accounts promise more than what regular accounts have to offer.
Regular ones have minimal interest rates so you won’t really see a lot of growth for your money even if you keep it untouched for a long time. High-yield accounts promise higher interest rates so your money can grow better. However, they have requirements, like a lock-in period, so you can’t take your money out right away.
Lots of people like this technique as it also helps them save for the future. Such accounts will force you to stay away from what you may consider as your extra money so you can’t really take it out without a good reason.
No matter what your choice is, however, it would be wise to always allocate some amount for spending on your tax filing. Putting money away as a budget for paying tax services like H&R Block or Jackson Hewitt is always a good way to prepare for the next tax season. If you got this covered, you’ve already taken a major step towards your next tax filing.