What to Do With Your Tax Refund

To keep things simple, there should be at least three things you should consider:

1. Add some cushion to your cushion

Nobody likes to plan on things going wrong, but invariably they do. Your car’s transmission will go out or your pet will swallow a golf ball, and you need short term savings to cover these types of emergencies. It isn’t a matter of if they will happen; it is only a matter of when. A good goal is to have at least 3-6 months of your monthly non-discretionary spending in an account separate from your checking account. If you don’t have this much consider using part of your refund to add to your cushion.

2. Pay down some debt

The more debt you have, the more interest someone else is earning on your money. Your ultimate goal is to be debt-free, but just as you didn’t accumulate it overnight, neither will you pay it off overnight. Evaluate your current debt and put some of your refund towards the debt that is charging you the highest interest.

3. Have some fun

After you have put some money into savings and paid down some of your debt, take the rest of your tax refund money and spend it any way you want. Extremes rarely work and I have found that people who have balance in their lives are happier. Wasting all of your money will lead to poverty while saving every last cent can lead to resentment.

So there you have it. Be responsible with most of your tax refund, but have a little fun with the rest of it!

Ecclesiastes 3:13 (NLT) “And people should eat and drink and enjoy the fruits of their labor, for these are gifts from God.”


http://nicoleodell.com/2014/03/do-you...