The 5 Smartest Ways to Spend Your Tax Refund

If you’re one of the lucky ones, you’ll have some money coming back to you this tax season. Of course, how you spend that money is certainly up to you, but before you make a down payment on that 60″ TV or buy those tickets to the Super Bowl, slow down. Take a minute to think about how wise that purchase really is. Sure, buying a sweet gadget or taking a nice vacation will definitely make you feel good right now, but you’ve gotta remember something: tomorrow’s always out there, just waiting to get its hands on you – and even more significantly, how you prepare for it will determine your fate.

That TV’s not looking like such a good idea anymore, is it? Why not use your tax refund for something like this instead?

  1. Work on your credit card debt. A recent CNBC article revealed that 24% of Americans currently owe more in credit card debt than what their savings can cover. The average interest rate for credit cards stands at 12%, which means that the longer you take to pay off your card, the more you’re going to owe. Get out in front of this rolling tragedy by paying off one of your cards now. Even if you can’t obliterate the entire balance, you’ll end up saving money on interest in the future.
  1. Further your career. Unemployment rates are up to 11% for folks who never finished high school, but they’re 3.8% for those with a college degree. That’s a huge difference. If you don’t have a bachelor’s or even an associate’s degree, why not use your tax return money to enroll in a program of higher learning? Earning a degree from a college – either on campus or online – will make you more marketable for those higher-paying jobs.
  1. Start an emergency fund. You just never know what might happen during the course of a year. Car accidents, fires, burglaries and health concerns are unforeseeable expenses that can do serious damage to a family’s finances. Prepare for the worst by using your tax return check to start an emergency fund. If something does go wrong, you’ll be prepared.
  1. Make your home more eco-friendly. Save loads of money on home energy bills and reduce your carbon footprint by using your tax return check to replace old kitchen appliances, update your heating system and add environmentally-friendly accessories to your home, like this green refrigerator machine. The greener your home is, the more you’ll save. Be thorough about it and you’ll save on everything from groceries to electricity bills.
  1. Invest in your future. Put some extra dough in your 401(k) now if you want to live the high life later. Using your tax return to cushion your retirement provides more security once the paychecks stop coming, and even if you don’t put your entire refund towards your retirement, it can still make a big difference. In the long run, the interest is more valuable than a big-screen TV, right?

The desire for instant gratification is built right into us. It’s part of human nature. But evolution provided us with foresight and the ability to plan for the long-term, too. As a species, perhaps we don’t use those gifts often enough, but it’s never too late to start, and 2013 is as good a time as any. What was the best investment you’ve ever made with a tax refund? Tell us about it in the comments below.