Here's The Smart Way To Spend Your Tax Refund

Monopoly Income Tax

Photo: Images_of_Money via Flickr

If you get a tax refund most years it’s easy to fall into the trap of thinking of that refund as a windfall and blowing it on stuff you don’t need.Instead use that money to kill a debt, bulk up your emergency fund, or invest in your future.

Personal Finance weblog Get Rich Slowly recommends that you take 5% of your tax refund and spend it on something fun, but the other 95% should go toward your plans for the future.

Perhaps this will be to pay off a smaller debt in it’s entirety, perhaps you should set aside a third or half to immediately go into your savings account, or as a capital investment to improve your career, house, or other important feature of your life.

Personally my wife and I are looking at somewhere around $3500 for our refunds this year. We plan on using around half of that to build a wooden backyard privacy fence ourselves and the other half will go to our savings. We are putting $400 away for new blinds and a couple of home office peripherals for me.

So for those of you receiving a refund of four figures or more consider using the bulk of your refund to help fund the life you’re working to achieve.

How to Spend a Tax Refund | Get Rich Slowly

This post originally appeared at Lifehacker.

Don’t Miss: 7 Money Tips For Couples Starting A Family >
 

Read more: 

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.