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Tax season is here again. That mean tax refund. You took out all your receipts and itemized your expenses from the past year. You met up with your accountant to do tax for you, or you decided to save money and did your tax yourself with Turbotax. No matter what you did, I hope you ended up getting a refund instead of paying Uncle Sam.
Now, what are you going to do with your newly-acquired wealth?
Well, there are a lot of things you can do with that money. You can use it to buy a new purse, go to Macy’s and shop until you drop, dine at the most expensive restaurant in your area, buy the latest gadget, go to a casino and try your luck or better yet why not make that money to work for you?
Making money to work for us is one way to help us prepare for the future.It is one way for us to see the fruits of our hard work.
Acquiring extra money can be a great temptation. It can lead us to our doom. However, it is up to us to keep it from causing our downfall.
So, what are some ways which we can make our money to work for us?
Pay off Debt
Paying off debt is one of the principles highlighted by Dave Ramsey in his book Complete Guide to Money.
If you have a credit card balance that has been sitting on your card for a while, pay it off. You will be glad you did. Now the credit card company is not making money out of you.
Or if you have a student loan, pay it down with your refund money. It will help decrease your interest rate. And it will reduce the amount of time you have to pay it back.
Add to your Emergency Fund
If you do not have an emergency fund, you better start now with your tax refund money. According to Dave Ramsey, an emergency fund is a reserve of three to six months of expenses that you set aside to cover any unexpected costs such as a car wreck, hospital visit or leaky roof.
It is inevitable that down the road we will get into a negative financial situation. It is important we should prepare for this dilemma. This is where emergency fund comes into play. It creates a buffer between us and life’s uncertainties.
Pay down your Mortgage
If you already have a fully funded emergency, then you can use the tax refund somewhere else, like your house.
If you have a home with an existing mortgage, use your tax refund money to make an extra payment to your outstanding balance. You can shave off a few months of even years from your mortgage term.
Invest with Vanguard
Vanguard is an investment company with a lot of products to choose from. They have exchange traded funds(ETF), mutual funds, retirement plans, etc.
What I like about them is you can invest with as low as $1000. Vanguard has rock-bottom fees so that you will get your money’s worth.
Check them out. I am not affiliated with Vanguard in any way. I just have an excellent experience.
Invest with Lending Club
Lending Club is a type of peer-to-peer lending company. Investors contribute a certain amount to a pool of money to come up with the loan amount that a borrower has applied for. Borrowers are of course screened and must be able to meet the criteria for credit score which is 660 FICO.
The interest earned from this investment will depend on the borrower’s risk. The lower the credit scores are, the higher the interest.
Shares in Lending Club are called notes. Notes are $25 each. Investors can diversify their investment by spreading their investment money across different notes with different risk level. For example, if you have $500, you can buy 20 notes. You can spread these 20 notes to 20 borrowers, or 20 notes to 10 borrowers, depending on what you want.
I am new to investing, and Lending Club made it easy for me. There is no cost to open an account with Lending Club. However, there is a minimum $25 to invest in one note. You can open an account first and feel how the process works and if you like it, then you can start transferring funds.
I started with a minimal amount and then started building it up once I learned how to work it. I am currently working on achieving the minimum amount to qualify for automatic investing.
Invest in a Blog
If you want a business and have a passion for helping people by sharing your ideas, why not start a blog. Blogging is one of the businesses that require a minimal start up. You can start with as low as less than $5/month.
You can earn money from doing what you love to do. It can also be a source of passive income. And it’s not that hard to start.
Check out my post on How to Start a Blog for a Newbie.
Donate to a Charity
You can also donate to a charitable institution of your choosing. Make sure you get a receipt so you can write it off for next year’s tax filing. You can check some of the charitable foundations from below.
Add to your Fertility Fund/Add or start a college fund for kids
If you are like me, who is struggling with infertility, might as well put your tax refund on your fertility fund. It will help offset the cost of the treatment.
But if you are lucky and blessed, who is pregnant or have children already, it is smart to start a college fund for them. This fund will help them not end up with outrageous student loans later on. They will thank you down the road.
Take a Vacation
If nothing from the above options appeals to you, then I am positive this will. I am sure you want to get way from your busy, stressful work life or your stressful and frustrating fertility journey. You are in desperate need of relaxation and quietness. Then go ahead, use your tax refund to plan a vacation in a beautiful, relaxing place. You deserve it!
Your tax refund can do a lot for you, but you just have to choose wisely.
How did you use your tax refund this year?