The data from the 2019 tax year is in, and if it’s any indication of the 2020 tax year, most people are in for a sizable refund. In the 2019 tax year, 73.2% of filers received refunds, and the average amount was $2,725. Since you didn’t work any extra hours for it, that refund is kind of like a bonus. So, how are you going to spend that extra cash? Keep reading for some fun, frugal, and downright responsible options.
Fun Ways to Spend Your Tax Refund
Sensible is not another word for boring. You can spend your refund sensibly and still have fun.
Use Your Tax Refund to Book a Vacation
We’re not talking about a 10-day bender in Mexico. If you’ve been working way too hard, you run the risk of burning out. Burnout can lead to fatigue, insomnia, immunity issues, heart disease, type 2 diabetes, and more. Use your refund to enhance your wellness by booking a relaxing, stress-free vacation.
Make Your Refund Last by Buying a Membership
Choose something you enjoy - theater, dance, exercise, golf - and buy an annual membership. You might hesitate to take $30 from your paycheck each month to pay for a membership, but a tax refund can allow you the opportunity to treat yourself, guilt-free, while the money is available.
Frugal Ways to Spend Your Tax Refund
Track Down Some Tax Season Sales on Big Items
Many big retailers offer discounts during tax season. If you’re overdue for new appliances, home repairs, or other big-ticket items, tax season may be the perfect time to score a deal.
Pay Off High-Interest Loans and Credit Cards
Your tax refund can disappear pretty quickly if you choose this route, but you’ll reap the benefits right away with the interest you’ll be saving every month. Credit card debt is typically the worst, so focus on clearing credit card debt first.
Use Your Refund to Invest in Yourself
Your tax refund could be your ticket to a new career. Invest in a course or program at a college or technical school. Check out our article on jobs that pay well without a bachelor’s degree.
Responsible Ways to Spend Your Tax Refund
Turn Your Tax Refund Into Retirement Funds
Time is flying. Even if you’re in your 20s or 30s, retirement will be here before you know it. Start planning now. Your future self will thank you!
Create an Emergency Fund
What would you do if you were suddenly and unexpectedly unemployed? If you don’t have enough savings put away to scrape by for three to six months, consider depositing that tax refund into a separate savings account that you don’t pull from for daily spending or bills.
Buy Life Insurance
Life insurance is a must, regardless of age, especially if you have dependents. Don’t leave your family members in a lurch - life insurance is inexpensive, and it’ll likely only take a small portion of your tax refund.