If you have submitted your tax return and are expecting a tax refund, you’re probably looking at your newfound wealth and thinking to yourself: “How will I make the most out of this?” To help you out, we have come up with a few ways you can use that extra money and what you should avoid doing:
…Pay off debts
If you’re one of the unfortunate few who got behind in your payments, now is your chance to make a significant payment.
Paying off your debts is not the most appealing activity in the world. But it can free up some of your monthly income which you can use for other activities, or it can reduce the amount you have to pay, so you only have to continue funding it for a shorter period of time.
…Start an emergency fund
Having some money you can access in case of an emergency can be handy. If you don’t have some, now is the time to stash away some of that cash for a rainy day.
An advantage of having an emergency fund is that you will have the cash to pay for something that suddenly comes up, like an emergency vehicle or home repairs and more. You also get to avoid having to charge these expenses on your card for an interest rate you could’ve prevented.
If you’ve been eyeing off that impulse purchase at the store for some time? Now that you have some extra money on hand, it may be time to go for it. Use the money you have acquired to finally get yourself something sweet to reward yourself for all the hard work you’ve done over the past year.
…Spend it all in one place
Suddenly getting your hands on extra cash can make your mind wander, especially if you’re not used to handling that kind of money. That is why a lot of people give in to their impulse and buy large items.
A one-day-millionaire is someone who comes across a large sum of money and uses it all in one day. It’s easy to do just that: all you have to do is shop online and keep making purchases. By the end of the day, you will come to realise that the extra money you had that morning is now gone on items that you really didn’t need and only purchased it because it was “on sale”.
…Expect to get a refund
Now, just because it’s the season of tax refunds, don’t expect to get one. That way, you won’t be disappointed. It’s also important to keep the returns out of your budget because if the check does not come, your budget will be in shambles and you will have to do it all over again.
Be informed and don’t worry if you don’t get a refund from your taxes this year. It just means that you are doing a great job at managing your tax situation.
Finally, if you ever feel like your car needs to be replaced, you can use your tax refund as a down payment. Get in touch with us here in Alpha Finance to find out how you can get a new car within the next 24 hours.