It’s that time again: tax season, a period when disgruntled workers fill in paperwork in the hopes of receiving some of their money back. Do you expect a refund or will you owe Washington even more money?
According to the Internal Revenue Service, the tax agency has already issued more than 40 million refunds this year and the average refund has amounted to more than $3,000. Studies show a significant number of taxpayers will pay down their debt, save it and get their financial picture in order.
If you are expecting a substantial refund then don’t consider splurging at all. Instead, think about putting it into your savings account, rainy day fund, mutual fund or any other type of savings plan. Whatever you do, don’t spend it all on shoes, dinners and big-box purchases. In today’s economy, it’s important to think about the future.
Here are seven things to do with your tax return this year
After working hard for a year, it might not seem fun or exciting to put your refund money into a high-interest savings account. However, this is wiser than spending hundreds of dollars on a new wardrobe. If you haven’t saved much over the past year then this chunk of change will help you catch up.
Did you only have enough funds last year to save? Well, if you receive a tax refund then consider putting that money into various investment accounts, such as mutual funds or GICs, or into the stock market.
If you have an enormous amount of debt that you have yet to pay down then think about allocating a large percentage of your tax refund into your credit card debt, student loans or car payments. By limiting your amount of debt, you can free up your disposable income and transfer that money into your savings.
Will 2014 be the year for gold? If the first two months are any indication then yes. The yellow metal has gained 12 percent since January and is now valued at more than $1,350. Silver, meanwhile, is a little more than $20 per ounce. Invest in precious metals now before it goes even higher.
Are you considering starting up a small business or a freelance enterprise on the side but don’t have the necessary capital? Consider utilizing your tax refund to invest in establishing your very own business for supplemental income, a part-time job or an entire career change.
Education & Skills
The labor market has never been more competitive than it is today. For each job advertisement, there’s likely dozens of other candidates who are just as qualified as you are. This is why it’s important to be a step ahead and invest in yourself. You can accomplish this by upgrading your skills, enhancing your education credentials and learning something new.
Despite all of the chaos that has ensued in the United States since the economic collapse, we never stop to think about and see how grateful we are to live in a (somewhat) free market, capitalistic society. The standard of living of most Americans is higher than those living in the Philippines, China, Uganda, Zimbabwe, Ukraine and elsewhere.
This is why giving your hard earned money to a charity is important because a lot of them help those who are truly in need. With your tax refund this year, think about making a donation to a worthwhile cause or one you support.