How to Wisely Spend Your Tax Return

The best part about filing your taxes (we know that seems like an oxymoron) is finally getting your refund check! Now you may want to treat yourself to a little shopping spree or vacation, but hold your horses! There are some ways to wisely spend your tax return that don’t involve splurging.

Increase (or Start) Your Emergency Fund

It’s so important to have an emergency fund to cover your needs in case you should find yourself in financial pickle. It’s best to have at least three months of expenses saved, so use your tax refund to hit or start that goal.

Spend It On Something You Actually Need

Has your water heater been failing but you haven’t had the funds to fix it? What about car trouble you couldn’t pay a mechanic for? Spend your tax return on major things that will improve your living situation.

Pay Off High Interest Debt

If you have a student loan with a 9% interest rate or a credit card bill that is accruing more interest than it should, pay off those debts with the money from your tax return.

Improve Your Home

Could you use a new bathroom or upgraded appliance, maybe just a new coat of paint in the living room? Put your tax return towards home improvements rather than putting them all on credit or taking out a loan.

Start a Tax-Sheltered Account

You could turn that couple hundred dollar tax return into thousands of dollars in a 529 or Roth IRA plan over a few years.

Contribute to Charity

Always wanted to make a charitable donation but were living on too tight a budget to use money from your regular income? Use your tax return to donate food to the local food pantry or buy some new beds for dogs at the animals shelter.

Treat Yourself

We know we said to spend your return on other things, but if you’ve been saving all year, you deserve a little reward. Treat yourself to a nice dinner or weekend trip. But watch yourself — a $600 return does not mean you should take a $4,000 vacation.

Let the team at American Investment Planners LLC been your resource this tax season. We have experienced many of the same situations our clients have, so we know exactly what solutions to offer. For more information about our tax planning services, please visit us on our website or give us a call at (516) 932-5130.

*Cadaret, Grant and its representatives do not provide tax or legal advice. Tax advice provided solely by American Investment Planners LLC.