April 15th has passed! As most of us take a relieved sigh, we are thankful that the major part of tax season is over. At this point most of us have filed our tax returns and enough of the proper 1099s, 1040s and 1098s to last us a lifetime. Unfortunately, it will only last for a year, so let's make the best of it!
You may have been one of the lucky 64 million people to get a tax refund this year. After you have filed, accepted and had your money dispersed, how will you spend it? Here are a few good ways to put your tax money to work for you this year.
1. Start an Emergency Fund. By far this is the most important. An emergency fund is a vital part of everyone's financial future. An emergency fund can ensure that, while you are paying down debt or just trying to live frugally, when an emergency comes up, it will not be a complete setback. A minimum of $1,000.00 is recommended to get you started. When you have that securely in a savings account, you can apply the rest to pay off debt.
2. Pay Off Debt. If you have already been savvy, you will have saved an emergency fund already and are able to use the entire refund check to pay down debt. Start with the smallest debt first to get an easy win. You can have a leg up by paying a large payment on a debt you deem the most urgent.
3. Go Shopping (at a thrift store). You may be tempted to blow the extra cash on eating out, shopping and entertainment. Strongly resist this urge. If you are able to set aside an emergency fund and have been saving and paying debt vigorously, maybe it is time to loosen up just for a moment. Reward yourself, but very carefully. Spend your money on something that gives you just enough pleasure to get you through the next few hurdles. Rewarding yourself on your road to financial freedom is important. Debt fatigue can get you down, and may cause you to give up. Hit a thrift store and find something nifty.
4. Pay Insurance Premiums in Advance. One of the easiest ways to save money is to pay your premiums in advance. Companies, especially for car insurance, give you a discount just for paying ahead. Use the money to pay these things while you have it.
5. Invest. If you have a nice sized emergency fund and have paid off debt, investing is the next best way to go. Invest for the future in a Roth IRA or save for your children's college in a long term mutual fund. Get advice from a financial adviser before going into any investments without the proper knowledge.
After all is said and done, you are the one who is in control of your money and what you do with your tax refund. No one will care more about your money than you do. Making sound decisions and planning for the future makes the best use of the lump sum of money the government gives to you once a year on that magical day.
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