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No one looks forward to tax day (except perhaps the IRS). But everyone loves a good refund. If you're up for a big payday this tax season and aren't sure where to spend it, consider these practical and creative ways you can take advantage of your surplus this season.
1. Pad your retirement fund
It's never too early to save for retirement. And the earlier you invest, the greater the returns you'll see. (Ah, the beauty of compound interest.)
The best options are either an employer-sponsored retirement account like a 401(k) or a personal tax-sheltered retirement account like an IRA. These both allow you to save for the future and build your savings tax-free until you withdraw the funds.
Keep in mind that you won’t be able to invest your tax refund directly into your 401k account—that money technically has to come through your employer. However, you can work around this by adjusting your contribution amount from your paycheck based on your projected refund. Then simply use the refund to pay for your bills as you would have with those diverted paycheck funds. For instance, if you will be receiving a $2,000 tax rebate, you can divert $500 from your paycheck for four months. The best part about this option is that if your employer matches 401k contributions, you will be saving even more money.
Trust us: 70-year-old you will thank you for it.
2. Give back
If you're feeling generous, consider donating your refund to a favorite charity or cause. Researchers found that donating to charity activates the pleasure centers of the brain, so it literally feels good to give. Plus, charitable donations are tax deductible, meaning you can write off that donation on next year's taxes. It's a win-win.
3. Leave on a jet plane
A vacation can be hard to budget for, so take advantage of the bonus money you get in your refund and treat yourself to a break. Studies have shown that experiences bring greater happiness than purchasing material things. So whether that's a weekend trip to visit family or a week-long tropical getaway, you'll come back refreshed, recharged and feeling good.
4. Nip and tuck
Have you ever wanted to get a makeover but couldn't justify the cost in your budget? Well, now you have an excuse to treat yourself. Lift a little here, tuck a little there, and luxuriate in your new skin. Whether you want a simple facial rejuvenation or body contouring, specialists like Alpine Plastic Surgery can offer a variety of treatment solutions to meet your needs and help you feel great in your skin — and just in time for bikini weather.
5. Stock up on essentials
Month to month, you have may not have much wiggle room in your budget to buy bulk. But couponers and discount shoppers know that buying in bulk can reap bulk savings in the long run. This year, use your refund to stock up on essential items like toiletries or build up your food storage. Then enjoy the extra spending money you save on your grocery bills the rest of the year.
6. Get a tune-up
Regular car maintenance is important, but it can come with a hefty price tag. If you've been procrastinating a tune up, why not use your upcoming refund to give your car a little TLC. Keeping your car in good shape will keep you safe on the road and will help your car retain its value over time. Not a bad investment.
7. Pay off credit card debt
It may not be the sexiest way to spend that fat tax cash, but if you have outstanding credit card debt, there is no time like the present to pay that off. Debt can weigh heavy on the mind and the wallet. Sleep easy and make your future brighter by paying off outstanding debt so your credit line won't come back to bite you down the road.
Tax day may not be your favorite day of the year, but there are plenty of ways to take advantage of your refund this season. Whether you invest it, save it, or spend it on yourself, your tax refund is a great opportunity to spend it on something special.
What would you add to the list? Tell us in the comments.