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8 Super Smart Ways To Use Your Tax Refund This Year

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Are you expecting a tax refund check this year?

We all know that saving it is a better option than completely blowing it, right?

But those aren’t the only 2 options when it comes to your tax refund.

Listen below as I share 8 super smart ways you can use your tax refund to win with money this year.

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Read The Transcript

Speaker 1 (00:00): Welcome back to the wealthy neighbor show. This is installment 10 of our money talk Monday series and today we're going to be talking about tax refund checks. Now it's tax refund season. And even though my personal belief is that you should try to minimize your tax refund by claiming the proper amount of dependence and deductions throughout the year, that's simply just not what everyone else does. And so with that, I definitely wanted to give you guys that'll be receiving a tax refund this year. A short list of a few smart things you can do that will help you live a wealthier life once you get that refund check. So let's get to it.

Speaker 2 (00:52): [inaudible] [inaudible] now,

Speaker 1 (00:52): this list isn't necessarily in order of importance, however, I believe this first one is the most important suggestion and that is to prioritize your physical and mental health. So maybe you've dealt with some things and you've needed to go to counseling for some time now, and the cost of that has just kept you away. Or maybe you've had some dental work that you've been neglecting or postponing for awhile or maybe for you, it's a medical procedure that you've put off. Whatever the case is, a really smart use for your tax refund will be the set some of that money aside to prioritize your wellbeing. So as you're focused on cutting expenses, increasing income and all those things, it's important that you're operating at your peak performance. And let me just say, if you're generally healthy with a high deductible health plan, another thing you can do is also contribute to an HSA where your money can grow tax free and it can take care of health expenses whenever you do need them.

Speaker 1 (01:49): I mean, after all, you can't actually have true wealth without good health, right? The second super smart thing you can do with your tax refund check is to get yourself caught up on your bills. Now maybe you have a habit of paying your bills late and getting hit with late fee after late fee, or maybe you consistently overdraft your account just trying to make ends meet. If that sounds like you, consider using your tax refund to get yourself caught up and back to square one financially. You can actually set some money aside in the savings account for this or if you know you'll just end up transferring it back to checking and buying things you don't need. You can always just prepay a few of the necessary bills and get yourself a month ahead. Now with this, you're going to need to create and follow a spending plan.

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Speaker 1 (02:38): This is so you can stay ahead and avoid letting some of those old habits creep back in and get you off track. Again. The third thing on my list of super smart things you can do with your tax refund is setting money aside for emergencies. Listen, life happens so you need to be prepared. The first time I ever actually went into debt was because my car broke down on a road trip and I was 20 hours from home. Now at the time I had a credit card that I would only use to cover any emergencies. But see the problem with that was I didn't actually have the money to cover the car repair. So there I was stuck paying interest on a credit card bill that I couldn't afford on a repair that I couldn't afford. And so this entire situation could have been avoided had I just taken the time to build up enough savings to cover at least one month of expenses.

Speaker 1 (03:29): And that's a great starting place. But ultimately your goal should be to get to a point where you have six to nine months of expenses set aside and so you can open up an online account that keeps the money separate from your everyday checking account. That way you don't see it whenever you check your account and get tempted to buy shoes or whatever it is that you like to buy, but you'll also have access to it and be able to tap into it whenever it's necessary. Number four on this super smart list is to take care of some home and auto maintenance or even repairs that maybe you've put off. For most people, their home is one of their biggest investments and one of their biggest expenses and your car is probably used to get you back and forth to work more than anything else.

Speaker 1 (04:11): So make sure that those two things are taken care of and that they're working properly, especially if you've been putting off some small things for awhile because what happens is a lot of the times these issues start off as really small things and then we ignore them and they develop into significant issues that cost a ton of money. So make it a priority to use your tax refund to take care of that check engine light or that roof leak or whatever issues you've been ignoring for a while now when it comes to your house or when it comes to your car. Number five on the super smart things you can do with your tax refund. Listen, if you don't have any or if you've maybe used one of them completely up recently, you can set up some sinking funds to help with expenses that aren't regular monthly expenses, but that you can expect to come throughout the year.

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Speaker 1 (05:01): For example, if you own a car, there will be a day when you get a maintenance bill. Now, you may not know when, but you can safely assume that it will happen. And so setting aside a few dollars every month can help ease the sticker shock when you do get that repair bill or any other important item pops up there, it should be taken care of. And so some other things you can put some money aside in a sinking fund for our home maintenance, uh, auto maintenance, birthdays, anniversaries, Christmas vacation, um, all those little things, just put a little bit of money aside at a time and allow that to build up that way. Those things don't catch you off guard and cause you to go into debt. Again, you can open up a separate savings account for these so that you're not tempted to use the money for other things that are maybe less important.

Speaker 1 (05:52): And finally you can always use your tax refund check to pay off debt, see not does paying off debt immediately increase your available cash flow. You also save money on interest over time. And so that's a double win. That's super hard to pass up, especially if you're still paying on credit cards, cards, student loans, payday loans, or any other type of consumer debt. So there are a few ways you can start. You can start with paying extra on the debt. With the smallest balance you can attack the one with the highest interest rate first or even just the debt that you're the most frustrated with at the time. Well, however you decide to start, just get started. And for those of you that are consumer debt free, a lump sum mortgage payment can save you thousands of dollars in interest as well. You can actually look up a mortgage amortization calculator to determine how much and I'll be sure to link to one of those in the show notes, which again you'll find at winningtowealth.com/mtm10 another super smart use for a tax refund check is to invest it and when I see invest, I don't necessarily mean into retirement or brokerage accounts, although if you're in that place that is an incredible way to use your tax refund check, but you can also invest in new skills that are lead to additional income.

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Speaker 1 (07:11): Um, there are courses on sites like Coursera, which again I'll link to in the show notes that can lead you to becoming more skilled in your field and your profession, which ultimately leads to raises. Or maybe you have a business idea, you can use a portion of your tax refund to test out that idea and get feedback from a small group. Or if you've done that already, you can just go all in and get started on your business idea. All of these things can lead you to more income. And as we know, your income is one of the greatest tools you have when you're on this wealth building journey. And last, but certainly not least on the super smart ideas for your tax refund, you can use that tax refund check to have some fun. I mean, after all, that's money that you worked hard for and you earn.

Speaker 1 (08:00): But here's what I'll advise you to do. Make sure you've taken care of some of the more important things that we've already talked about first. But after that, setting aside a small portion for something that excites you and keeps you motivated as you build wealth for your family, that's just a fantastic way to use your tax refund. So again, take care of some of the important things, but if you're in that place where you feel like you need to relax a little, enjoy yourself just a little bit to keep yourself motivated and going, by all means have at it. So if you've enjoyed this money talk Monday episode, be sure to share it with a friend or you can always leave us a five star review. If you're listening to this on Apple podcast, these are two great ways to show your support for the show that really don't cost you anything. Also, if you want some practical wisdom on how to actually apply the tips that I just gave you, you can download the winning to wealth guide to better money management, which you can find that winning to wealth.com/guide that is winning to wealth.com/guide but Hey, thanks again

Speaker 2 (09:06): IBM for listening to another money talk Monday. We'll talk soon. [inaudible].

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Resources Mentioned

Pay Off Debt

Mortgage Amortization Calculator

Coursera

Udemy Courses

Anticipating a tax refund check this year? Learn how to spend your tax refund check wisely in this episode

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