What are you planning on spending your tax refund on? There are several options available for you. No matter what you decide to do, you need to exercise caution as you use this money so that you do not spend more than you actually receive back.
One option you have is to pay off part of your debt with your tax refund. It can be satisfying to see large amounts of debt quickly eliminated. It is important that if you do decide to pay off your debt, that you do not simply rack up more debt for next year. You can adjust your withholdings to get your refund back in your paycheck spread out over the year. This will help you if money is tight.
You can save the money that you receive. It can go towards your emergency fund, your retirement or your child’s education. You can use it to open a mutual fund account, and really allow interest to work for you instead of against you. You can save it for the down payment of your home or to put towards the purchase of a new vehicle in a year or two.
You can go ahead and spend it all. It is easy to spend money, and you can quickly use it to buy the new big screen television that you have been eyeing. You could also use it to fund that trip to Disney World you have been planning to take. You could splurge and do something fun for each member of your family.
Or you may be planning to spend it on practical things. You can visit the dentist or get new glasses. Your car or home may need new repairs or you can finally get the new washing machine. You may use the money to fund your children’s extracurricular activities.
Depending on your financial situation you can make the best choice for your family. I would suggest doing a little bit of all four things. You can put a large amount towards debt repayment, and some in savings. I do advocate spending a little of the money on something fun for the family. You can find the right balance for your family.
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