Income Tax Season is usually when you start seeing a lot of commercials about car sales, furniture sales, and online things. You will see a lot of people buying the latest and greatest of clothes, jewelry, and tech devices.
But one of the best things you can do with your money is let it work for you. This can be done in numerous ways. But today, I am only going to highlight my top 5 things to do with my income tax check.
Add To an Emergency Fund
A fundamental element in your financial health is having an emergency fund. If you don’t have one yet, this would be a great time to start one. They say most Americans can’t afford a surprise $400 expense, and I don’t want this to be you.
Use a separate account at your bank, and deposit most of that income tax return money in there. Then you should make monthly deposits into that account to help it grow to either 3 to 6 months of expenses.
Pay Off Debt
Whether it’s student loan, car, house, or even credit card debt. Statistically most Americans have Debt. So this lump sum of money would be a great way to take a good chunk out of the debt that you have.
When you decide to pay off some debt, make sure it makes sense. Put it towards that higher interest debt first. Then if you have some left over, put it towards other debt, or the other options on this list. I have multiple articles that talk about debt so check them out if you have more questions.
Add to Your Mortgage
Another way that you can use your income tax return is to make extra mortgage payments on your home. I talked about this in last week’s blog on if you should pay off your home early or invest that money instead.
When you have this extra money at the beginning of the year you can put it towards your mortgage which would inevitably give you an extra interest payment for that year. This will also give you more money for next tax season and you can just repeat this cycle yearly.
Fund Home Projects
When you have this extra income and don’t want to put it towards your mortgage. Home Improvement projects are something that could potentially boost the value of your home. Throughout the year you have a lot of ideas on how to improve your home but not all the time you have the funds to do it.
Whether this is with the kitchen, basement, man cave, bedroom, or garage this would be a great use of your money to allow you a more comfortable living space.
Add to Investments
If you don’t have anything else to do but you want to be able to have your money work for you then you should place this money in your investment account. I have a lot of articles in this blog that helps you determine where exactly to put this money so check it out for more information.
Rob’s Opinion
If you want to splurge on yourself and spend your income tax return money then go ahead because you probably deserve it. But if you would like your money to work for you to be able to grow it into more money then follow the tips from this blog.
I like to find a healthy balance between spending what I want and putting this money to work and I suggest that you do the same. I can only give you advice and tips but at the end of the day it’s going to be what you can tolerate because as one of my great friends always says you can’t tell grown people what to do.
If you have found this blog helpful please share with somebody else who may be trying to figure out what to do with this extra money. If you have any questions like always please comment them down below.
