Tax time is upon us and that means that some of us are due a tax refund from good old Uncle Sam. Some of us will get back a few hundred, and others will manage to get back thousands.
Regardless, it's money we didn't have and it can feel like an enormous windfall. Most of us have plans for this money before it even makes it's way into our checking accounts. Some of us are responsible, and some us are not so responsible.
Here are 20 responsibile (and a few irresponsible) uses for your tax refund. Can you spot the ones that are irresponsible? :
- Throw the money immediately into your savings account. Don't even look at it. Have it directly deposited if you can.
- Use the money to pay off (or at least pay down) your debt.
- Invest the money into a new business venture.
- Invest in your children by starting or contributing to an existing college savings plan.
- Invest the money into a savings bond, CD, or a high yield savings account.
- Tax Refund/per unit price of a box of Twinkies=Massive stockpile of Twinkies (they will be the only food that survives the Apocalypse, right?)
- Add the money to your car/house/vacation fund.
- Donate a portion or all of the money to your favourite charity.
- Get the money out of the bank as quickly as possible and bury the cash in your backyard. It will be safer there.
- Start an emergency fund (Aim for 3-6 months of your monthly expenses).
- Invest in continuing education or something else that will increase your net worth over time.
- Let your brother in law's best friend borrow a portion for it for that new pyramid scheme he is involved in (It is guaranteed to make millions!).
- Spend the money to do repairs and upgrades to your home.
- Be sure and spend the money up before it's deposited into your account. Rack up some overdraft fees while you are at it. You know the refund is coming, so why not?
- Take a much needed holiday, using only the refund amount…don't charge it or dip into your savings at all!
- Save it for retirement.
- Set some or most of it aside for next year if you think there is a chance you might owe next year.
- Walk into the nearest shoe store and throw down your refund check, tell them you want a pair of heels in that price range.
- Buy something special your family has been planning for. As long as your bills are caught up, you don't have debt and you have some money in savings; it is okay to have some fun!
- Re-Calculate your withholding so that you keep more of your money per paycheck and get a smaller refund back next year.
Which of those do you consider responsible vs irresponsible?
I think it's pretty clear which options are simply thrown in there for a laugh, and which ones are legitimate. No matter what you plan to do with your tax refund, just make sure you put some real thought into it. Nothing is worse then getting a large sum of money and seeing it disappear in the blink of an eye!
Answers: Irresponsible-#6, #9, #12, #14 and #18
What do you plan on doing with your tax refund this year?