1. Pay down high interest debt such as your outstanding credit card debt.
As unappealing as this may sound, you will be much farther ahead financially the sooner you can get rid of your credit card debt or other high interest debt.
2. Put it toward your retirement savings, or if you haven’t started saving for retirement, start now with your refund money.
3. Build up your emergency fund. It is wise to have at minimum 3 months worth of monthly living costs saved up for a rainy day. Ideally, you should save 6 months worth.
4. Buy insurance that you would otherwise not be able to afford to protect your family in the event of illness or emergency. By using your tax refund, you don’t have to factor the expensive premiums into your monthly budget, making it much easier to keep your family protected without financial stress.
5. Service your vehicle. You may have neglected your car recently because you were strapped for cash. Now that you have the funds, take care of your car.
6. Do some home renovations that will increase the value of your home.
7. Put some extra money towards your mortgage. It’s always a great feeling when you can pay down your debt and think about how much interest you won’t have to pay!
8. If you have been really disciplined all year and already have an emergency fund and retirement savings plan in place, spend some of your tax refund on yourself! Enjoy a day at the spa or a meal at your favorite restaurant. Do something that you normally wouldn’t do and create a nice memory. Think of it as a reward for all of your hard work throughout the year.
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