Whew! It’s over; tax day is done! Now it’s time to wait for your refund, or, if you already got money back, figure out what to do with it. Are you going to use it as a down payment on a new car? Are you going to splurge on the vacation of a lifetime? Or do you plan to save your money for an emergency in the future?
A lot of my clients ask me what they should do with their tax refunds. I really don’t like to answer this question because it’s a personal decision. To be honest, there’s no right or wrong way to use your tax refund. But I do give suggestions that might help your money go a little bit further. Here are my favorites:
- PAY OFF YOUR DEBT – Do you get sick to your stomach every time you get a credit card bill? If you answered yes, then you should use your tax return to pay off your debt. I know it doesn’t sound like fun, but neither is feeling like you’re drowning in debt. Paying off your small business or personal debt will not only give you financial freedom, but will also eliminate those high interest rates and fees that can really add up.
- CREATE AN EMERGENCY FUND – Do you have enough money to cover three months of business expenses? If you had an emergency at the office would you have the cash to pay it? If you answered no, then you may want to use your 2018 tax refund to create an emergency business fund. Again, this doesn’t sound fun, but it is another way to set you on the path toward a sound financial future.
- INVEST IN YOUR EMPLOYEES – If you have all the big ticket items you need for your business, you have an emergency fund and you don’t hold a lot of debt, then you may want to use your tax refund to invest in your company by investing in your employees. Consider offering your employees a unique training session or taking your employees to a trade conference. Investing in employees shows those who work for you that they are more than just a worker and can create a real sense of pride in the workplace.
- GIVE BACK and/or SPLURGE – If you have a favorite charity or a new one you have been interested in helping out, why not consider making a donation? Remember, if it’s an official 501c3 then you can deduct it next year from your taxes. Even better, give back to your favorite cause and then use a little of your tax return to splurge on something you’ve always wanted. Overindulgence once in a while is not a bad thing, if you can afford it.
So now that you’ve got your tax refund or are waiting for it, you have a lot to think about. Give me a call if you want to discuss your options. I love to make my clients’ money go further or make sure it’s used as intended–to provide for essentials, and then some if possible.
Happy tax refund spending!