Tax season might seem daunting for some, as it’s time to pay the government from their hard-earned income. Yet, it brings joy to a whopping 75% of Americans (according to TIME) as it means receiving a refund. Some even mistakenly regard this return as “free money”!
What’s essential to remember is that your tax refund isn’t really a windfall, but rather a repayment of the interest-free loan you gave to the government. This misplaced perception of a tax refund often leads to impulsive spending, under the pretext of it being a pseudo ‘reward’ or ‘bonus’, instead of managing it wisely.
If you’ve enjoyed tax refunds in the past, chances are that you’ve felt tempted to use some, or perhaps all of it, with little consideration. After all, you’ve toiled year-round for it, haven’t you?
Considering all your hard work, this year we suggest using your tax return differently. Consider it an opportunity to multiply your wealth or make substantial savings. Here are a few ways to do it:
1. ENROLL IN A COLLEGE COURSE.
Enhancing your education can often lead to a pay rise. Why not utilize your refund to fund a college course which could potentially boost your career prospects? If you already possess a Bachelor’s degree, consider further study, like a Master’s degree.
2. UPGRADE YOUR HOME.
Not talking about makeovers, but improvements that ensure long-term savings. Consider investing in energy-efficient fixtures like modern, temperature-regulating windows or improved insulation, which can significantly lower your utility bills.
3. SECURE YOUR RETIREMENT OR CHILDREN’S COLLEGE FUND.
Consider investing in your retirement first by contributing to your Roth IRA or 401(k). If you are already investing for your retirement, use the refund for your children’s college fund.
4. ENHANCE YOUR EMERGENCY SAVINGS.
Financial advisors often recommend maintaining an emergency fund of 6-12 months of expenses. If you lack such security, your tax refund could be a great start to building one.
5. INVEST IN FRUGALITY.
Consider your lifestyle and identify areas where a one-time purchase could lead to long-term savings. For example, investing in a deep freezer could allow you to stock up on seasonal, budget-friendly produce to save on grocery bills in the long run.
