Tax Refund Burning a Hole in Your (Virtual) Pocket?
Got a big tax refund coming your way? Well, you know they say…Don’t spend it all in one place! When it comes to unexpected windfalls, however, I have to disagree. While spending wisely is a must here are five ideas where you definitely should spend it all.
- Upgrade your bedroom furniture or mattress – There are a few things that seems to go by the wayside in family life, and one of those is everyday luxuries like adult bedding, mattresses, and furniture. If that bed is drooping where your pregnant belly used to lay, or you’re waking up every morning in the mattress canyon smooshed up with Hubby it’s probably time to upgrade. While I know it’s tough to spend money on yourself, quality of sleep can impact quality of life. Head over to The Clean Bedroom and find out all about their organic mattresses, beds, bedding, and more.
- Pay for a vacation in cash – You’re going to take a vacation anyway, right? NO? Well, that’s a problem too. Vacations are a great way for couples and families to take the time to reconnect and build memories together. Use the refund as a guide for a budget. Maybe it’s enough for the whole trip if you drive? Maybe it can cover some expenses and you can set aside enough for incidentals before you go. The main thing is to USE THE MONEY TO PAY FOR THE TRIP WHEN YOU BOOK IT! No putting it on a card and planning to pay it later! Need ideas? Check out these Road Trip Destinations!
- Max out your Roth IRA – If practical is in for you this year then maxing your your Roth IRA is a great way to put your money away safely while also ensuring a great tax break on next year’s return. The maximum yearly contribution to a Roth is $5,500 (unless you are 50 or over in which case it is $6,500). The Roth is also great for those who are trying to build a nest egg but often find it tough to save. Anything you’ve added can be withdrawn at any time without penalty.
- Pay an annoying expense in full – A super great (if not very exciting) way to spend your tax refund is by putting it towards a regular bill. Have a credit card you haven’t paid off or a small student loan debt hanging around? Knock it out and reclaim the monthly payment you used to put towards that. The main thing to remember here is not to waste the refund on paying a bill you will just rack up again. Pay something that will actually make a difference in your monthly bills. Maybe the rest of that car loan, for instance?
- Budget it (and stick with it) – You’ve got a small windfall coming your way, so make sure it doesn’t get frittered away. If you don’t want to invest it and you’re not planning a big purchase, another way to use your refund wisely is to budget it for something thattends to stretch you too thin. Think holiday gift fund, date nights budget, or entertainment spending. Divide your total refund by 12 to have a monthly budget, or allocate the full amount towards the things you normally do or buy that make things tight. Knowing you have $100/month for a date night makes it easy to plan and stay within the budget, and a $500 chunk goes a long way when buying gifts for the little ones.