As a newcomer to retail, I have learned that there is a rise in shopping this time of year. Whereas in my pre-retail life, I was completely unaware that shoppers come in droves between January and February (slacking off around March) to spend their tax returns. Of course, it is nothing compared to the holiday season, but tax return season is like a belated Christmas gift from the government. When some people get their tax returns back, they immediately spend it--just like you would spend your Christmas money.
Many college students are getting financial aid refund checks in, too, and they're also spending it like crazy! Of course, this works out great for the economy, but is giving the money right back to Uncle Sam the most sensible way to spend it?
Not really. If you're tired of having financial burdens and accumulating more debt, you should consider other ways to utilitze your money. I think the hardest thing people seem to realize is that you can't get rich (or even become financially stable) if you blow your money at every opportunity. During college, I blew through money, but now I'm beginning to recognize the value of a dollar and how important saving really is.
Here are five sensible ways to spend a tax return, and these tips also work for school refund checks, too.
Begin an Emergency Fund: When emergencies arise (and they always do), life is so much easier when you have a fund set aside to take care of life's unfortunes. You may not always be able to put an emergency bill on your credit card because several credit card companies are slashing credit limits to lower their financial risks. With an emergency fund, you can take care of all or at least part of the bill without having to charge it.
Create a Savings Account: You should treat an emergency fund and a savings account as two separate entities. You don't always have to save for retirement. Save money for something you really want--like a dream wedding or a vacation.
Pay off Credit Card Debt: You should have at least one credit card for emergencies, especially if you don't have an emergency fund. As for the other cards--pay them off and cut them up. You just might even improve your credit score!
Service Your Car: I cannot begin to describe the amount car trouble I've had ever since I turned 16 and got behind my first set of wheels, which, just to let you know, was an old rusty piece of junk. Since you have a little extra cash, go ahead and spend it on servicing your car--get new tires, an oil change, and whatever else your car needs to keep it running.
Treat Yourself, But Don't Overdo It: Here's the fun part! You don't have to save every single penny of your refund check. You can treat yourself to a manicure or a new dress. But only treat yourself to a few items after you have used your money for one of the more sensible options above. This way, you won't be tempted to blow all of it.