Question #52
“I’m getting a tax refund that’s like $2000. What should I do with it?”
Dear NE,
I’m going to assume here that you’re looking for ideas, and not a specific spending plan, since I don’t know your life like that. Here are some ideas for what you might do. Your work here would be to think of which of the suggestions before will be most meaningful for your financial life.
Take a small amount and buy yourself something nice. Please don’t do this with the whole amount unless it’s truly extra money. It could be the fancy and lowkey overpriced takeout, or new skincare products, or a nice bag. Don’t feel guilty about it, especially if it ends up being $100 or less. You’d be surprised at how good you feel about what you decide to do with the rest of the money once you’ve specifically decided on your splurge spend.
Pay off/down some debt. Take a chunk of money and throw it at your highest interest debt, or if it’s enough to pay off a debt entirely, do that! Similarly, put a chunk aside for an upcoming large expense, like your car insurance, or a new mattress, or something you’ve been meaning to do when you had a bunch of money. (A bulk shopping grocery trip, or new glasses, a home repair, or a quality item that you need, for example.)
You can also use all or part of your tax refund to boost your savings! Maybe you use it to get a jump start on your emergency fund, or to bulk up your savings bucket for a house. Maybe you’ve been meaning to have $500 put aside for a rainy day and you can check that off your to-do list in one fell swoop.
My final suggestion is to put some in your Roth IRA or other retirement or investment account. Let’s this “bonus” money do a little work for a future version of you!
