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Big chunks of money are dangerous
It sounds a little counter intuitive, but it’s actually very easy to take a big chunk of money and make
your financial position far worse than it is right now. I’m here with this training to help you make that position better, wherever you are on the financial
spectrum.
Everyone’s situation is different
Depending on where you are on the financial spectrum, what you do with your tax return money can make a big impact on your
financial future. These are in order from at which point in your life you should be thinking about
them.
Pay off chunks of debt
It can often be more effective for your motivation to choose a small account of your debt that you can pay off in one large payment. This will give you a
quick win, one less bill to pay, a nice feeling of accomplishment, and motivate you to pay off future
accounts much quicker.
Reward yourself with something small
The psychology behind this is if you get yourself something small you’ve been wanting, you’ve
rewarded yourself with your refund and satisfied your desire to spend. You’ve spent it responsibly on something you want, but you’ve left yourself 80% of it or more to be smart with it, which is what comes
next.
Save for a large financial goal
This could be something like a down payment for a house, a down payment for a vehicle, an
emergency fund, or anything else in the upper four to lower-mid five figure range.
Dropping the remainder of your tax refund into an account you’ve set aside for just this specific
purpose is a great way to keep it safe from being spent.
Buy things that make you money
Rather than buying thousands of dollars worth of stuff like cars, jewelry, electronics, get something small to satisfy your spending need, and consider buying investments that will pay you back over
time.
Deposit into a retirement account
You can deposit up to $5,500 of after tax money into an IRA or Roth IRA each year, and up to
$18,000 into a 401k.
One cool unconventional strategy to take advantage of your tax return to pad your retirement accounts
is by temporarily increasing your 401k contributions from your paycheck to deposit a couple thousand
extra bucks for your future.
Take a much needed vacation
Plan a short vacation and get away from it all for a few days. A nice vacation can help you come back refreshed with a new outlook, higher productivity,
and a heightened sense of motivation.
Make home improvements
Personally, I’m an advocate of making home improvements for improving the experience of your
home as well as improving the value, but certain home improvements can pay off far more than they cost. You may want to consider focusing
on these first.
Improve yourself
There’s a famous quote from Abe Lincoln that goes something like this – “Give me six hours to chop
down a tree and I’ll spend the first four sharpening my axe.”
The point is, the more you can sharpen yourself and your own skills, the better you are going to do in
life.
Let’s review
Depending where you are on the financial spectrum, consider the follow tactics while
making your decision for what to do with your tax refund.
● Pay off chunks of debt
● Reward yourself with something small
● Save for a large financial goal
● Buy things that make you money (invest!)
● Deposit into a retirement account
● Take a much needed vacation
● Make financially sound home improvements
● Improve yourself – Sharpen your axe
Visit Academy Success
Read the full article on Academy Success
http://academysuccess.com/tax-refund
