Tax season often makes people really happy. With many getting tax credits and a refund, this season often brings a huge boost to the economy because money tends to burn a whole in people’s pockets. However, if you’re trying to keep things frugal then you may want to consider treating this year’s tax return a bit differently. There’s many ways you can transform the money you get back during tax season, so you can worry less about what’s going on with your finances throughout the year. If you’re not sure where to begin then keep your check in the envelope and check out these tips. You’ll find that tax season will be your new favorite time to save.
1. Don’t Touch It
The first thing you should consider doing with your money is putting it away straight away. If you can, take the check directly to the bank and don’t look back. You’ll want to deposit it in your savings account, or an account that will allow it a special place to grow by gaining interest. You have many options here, so make sure to shop around to see which bank will give you the best deal on interest when it comes to your savings. If you don’t want your money in a bank, then consider buying a safe for it. The money won’t grow while in a safe, but it will sit there until an emergency arises or you find a good investment. Many people who fear electronic collapse often go with this method as it will ensure you always have cash on hand. Of course, make sure you have a great hiding place for the money and that no one knows you’re storing money in the home, as this could bring about some major problems.
2. Pay Bills
It may not sound like the fun thing to do, but using your money to catch up on bills is probably the best thing you can do for your finances. If you’re falling behind on anything then it may not be an option not to pay those things off. Try to put money on as many of these bills as you can so you don’t end up paying interest fees or, worse yet, collection agency fees. Once these bills are good to go then you may want to toss extra money on a bill that collects interest. Student loans, cars, mortgages and even your car insurance will benefit from having extra money put on them when you can afford it. If you’re good when it comes to bills then you might want to consider paying something off. This will give you extra money to spend each month instead of your typical tax return splurge time.
With bills out of the way and a sizeable savings account, you may want to do something to help your money grow. This is where investing comes in handy and can help just about anyone make their money work for them. Investing sounds pretty complicated, especially if you’re new to the task. There’s lots of friendly aids around to help you out though. You can also hire a stock broker to help you make the right decision. Of course, the best thing you can do for yourself when investing is to spend lots of time researching, especially when it comes to the companies you want to invest in. With a little luck, you’ll make a wise investment choice so your money can grow. This also means you’ll need to keep up to date with stocks too, so you’ll know when to sell to make a profit.
4. Necessary Repairs
It’s pretty easy to overlook all of the repairs that need to or should be done. If you have a car that’s been on the fritz then you might want to take your tax return and get it the tune up or repairs that it needs to go strong for the rest of the year. This will allow you to drive without worrying about having to pay huge fees in the future. The house is another area to look for improvements. Perhaps the house needs some new shingles or a new coat of paint. You might also check out the pipes and ventilation as well as inspect the water heater. If you don’t need to repair anything then you may want to consider improvements that could raise the value of your home. New countertops or cabinets, for instance, are smart ideas that will even make you feel more comfortable in your home.
5. Stock Up
If there’s nothing on the list that is an absolute buy, then your tax return money might be best used as a way for you to stock up the home. For instance, if you see a good sale you may want to stock up on the basic groceries you know your family goes through frequently. If you have a deep freeze then try to buy as much meat as you can, so you don’t have to worry about grocery shopping for a while. This can help you if you find yourself in a bind with money too as you won’t have to worry about budgeting in for these items. Food isn’t the only thing to stock up on. You should also consider personal items like soap, toothpaste, feminine hygiene products and more. Toilet paper, paper towels, diapers, trash bags and other must have items are a good option to buy too.
6. College Fund
Another great option for those looking to make a difference with the tax refund money is to set it aside in a college fund for your child or children. Most banks will happily do this for you and you can even have a separate account for each child. Make sure the account you choose for the fund will gain interest while your children grown and prepare to go to a high education establishment. There are also other programs that will help your college money grow. The government is even willing to help in regards to this with their 529 plan. This plan is based on your state and either works as a savings fund for college money or a pre-paid tuition plan for qualifying institutions. You may want to do some research into this to ensure it’s for you, but it could be a great way to invest your money in the future, while also helping out your finances and your child’s.
7. Emergency Savings
Without a doubt, if you don’t have an emergency fund for your household already then now is the perfect time to get one started. An emergency fund can be for anything from dealing with car problems, loss of a job, medical problems or even to help entertain while family or friends visit. Most middle class households should have at least $500 in savings to deal with problems such as these. However, if you can add and keep more in the account then you should always do so. This will help you from getting yourself into a major financial bind when something bad comes up. Plus, if you keep the money in the bank you’ll easily be able to grow your savings so you’ll be ready if the unthinkable happens.
8. Upgrade For Efficiency
If you’re happy with your home then it may be time to get to upgrading the appliances. This doesn’t just mean go out and grab any item you want though. Rather, try to find an item that is going to make your home more energy efficient. This isn’t really a hard task in today’s world, considering most companies try to incorporate energy star into everything they make. This means the appliance will use less power, which will save on your bills and your carbon footprint. You should look into refrigerators, stand alone stoves, washers, dryers and even surge protectors. If you need a computer or other devices to work then you should also consider investing some of the tax money there too. You can even get another tax deduction on some of these items next filing season, so hold on to your receipts.
9. Holiday Savings
Another great way to help your budget out is to put the tax refund money back for holiday spending. Every year, it seems like crunch time during the holidays because there is so much spending going on that it’s hard to keep up. By having a nest egg handy you won’t have to worry about your credit card bill skyrocketing, nor will you have to spend all of your paycheck on gifts. The savings you gain throughout the year will even help you buy more gifts, so you’ll get even more out of putting the money back. You can also dip into the money for emergency birthday gifts, which could help you out of a bind when you’re invited to an unexpected party.
10. Vacation Fund
Although this one may feel more like a splurge, you’ll be happy you did it when you’re stressed out from work. Putting the money back to take a nicer vacation is a great way to help save your budget in the future. Vacations tend to be pricey but with some money put back, you won’t have to worry about more going on your credit card while you’re there. Not to mention, vacations help with overall health. Thus, you will be less likely to make inconvenient splurges. You also won’t have to worry about getting depressed as much or getting burned out with your job. This will prevent you from taking unnecessary sick days that may not be paid for. Of course, the time to bond with your family will be priceless too, which won’t make you think twice about saving your refund for another vacation when next year’s returns come in.
Tax return season can be pretty exciting, but you shouldn’t jump ahead of yourself and splurge on things you won’t need in the near future. These ten ideas will help you get more out of your refund money, so you can enjoy the perks of a frugal budget for much longer than expected.