Most people dread tax season and some people get their taxes done as soon as possible to get their refund. In some cases, the refund is already gone before it's even in their bank account because they have already gone out to buy new things like a tv, patio furniture and other big ticket items. Those items are things that you are going to own temporarily and not giving you what you need to look out for your best interests right now.
If I were single, I would use my refund to pay off one of my loans, but since I am married, my husband and I discussed what to do with our refund and we decided to put it in our savings account.
Here are some other ways that you can use your refund that will help you in the long run:
1. Pay off or pay down debt.
2. Put it in your savings account for emergencies. An emergency is an unexpected car repair, house repair, appliance replacement or an unexpected medical expense. A new designer releasing their latest ANYTHING is not an emergency.
3. Use it to pay bills like your car insurance or life insurance in advance so you don't have to worry about it for 6 months or a year.
4. Open an IRA.
5. Buy all hygiene products and household necessities like cleaning supplies, dish detergent, laundry detergent, soap, deodorant, etc. for the year. You can make your refund go a lot further by getting as many of your boring essentials at the Dollar Store.
6. Use the refund for money saving items around the house, like a programmable thermostat, light bulbs, tankless water heater, extra insulation for the attic, etc. Then use the money that you save from installing these items and put it towards your debt.
7. Use your refund for expenses that you have to pay throughout the year that are not fun for anyone to pay. I'm talking about things like getting your car/driver's license renewed, oil changes, new tires, any routine car maintenance, anti-virus software for your computer, homeowner's association fees, vet fees for vaccinations and heartworm medications.
8. Put the money back for Christmas gifts, Birthday gifts, Anniversary gifts, Hostess gifts and other occasions where you need to purchase something for someone else.
9. Replace an item that is on it's last leg that will not be a fun expense to pay when it actually goes out like a water heater, air conditioning unit, refrigerator, stove, fixing cracks in the foundation of your home, or any other item that may be on it's last leg that you would rather fix now then be in an emergency situation later. No one wants their furnace to go out when the temps are in the negatives and the furnace company tells you that the technician will be out in three days to fix it.
10. Put the money back to pay for gas for your vehicle for a year. It will almost feel like you are getting free gas for a year.
11. Use the refund to pay for prescriptions and medical copays and deductibles that you may expect throughout the year.
12. Pay any membership fees, professional membership fees or dues that you may be responsible for throughout the year.
I know that it may feel more fun to have something shiny and new in your home, but wouldn't it feel better knowing that you have money put aside for the things that you know are coming up that you need to spend money on and then not have it touch your entire paycheck when it happens. It will almost feel like getting free tires put on your car or having a free air conditioning unit put in when it actually happens. If you still want that shiny new thing. do it the old fashioned way where you save a little money from each check and then pay for it in full when you have the money.