It is officially tax season! If you are one of the approximately 75% of Americans who receive an income tax refund, this money may be a substantial influx of additional cash for you. How do you plan on spending it? My best advice would be to invest or save your money. Here are some ideas to put your hard-earned income tax refund to work:
Investing puts your money to work for you. The first thing that may come to mind when you think of investing is stocks. This is a great option but not the only possibility. You could also use your extra money to invest in your property or even yourself!
Invest in Stocks
Depending on the stocks you chose to invest in, you can potentially earn significant returns on your investment. However, it's important to remember that investing in stocks comes with risk, and the value of your investment can go up or down depending on the performance of the company and the stock market as a whole.
Invest in Your Property
If you are a homeowner, investing in home improvements can increase your home’s value and make your living space more comfortable. A tax refund may not be enough to fund a full kitchen or bathroom remodel, but it is enough to get significant upgrades.
For example, if your kitchen is dated, refinishing unfashionable cabinets or replacing an old, ugly, or broken countertop can give your kitchen a facelift and increase the value of your home.
If your bathroom needs some love, a tub can be refinished for under $1,000, leaving enough funds for a new vanity, a fresh coat of paint, or updated décor.
Even if your home is up to date, income tax season is a great time to catch up on your growing list of small repairs.
Invest in Yourself
Have you been hoping to change career paths or get a promotion? You can use your refund to invest in your education or career development by taking a course or getting a certification.
For courses and certificates, you will get the biggest bang for your buck at your local community college. Go to their website and explore their programs to see if anything would work for you. Here are a couple examples of certificate programs you may find:
If you are in the Cyber Security field, a Certified Information Systems Security Professional (CISSP) certificate could open the door for Cyber Security positions such as Security Systems Administrator, Information Assurance Analyst, or IT Security Engineer. At a community college in a medium-to-large city, the program to attain this certification costs about $2,000.
If you are more interested in the Engineering field, an AutoCAD Draftsman certificate will only cost you about $1,500 and can help you get your foot in the door at a new career in engineering.
Community colleges also offer an array of programs for anyone looking to make a fresh start in a new field. Once you have started your new job, look into company tuition resources to expand your skills and education even further while incurring little to no costs.
Add to Your Nest Egg
If you do not currently have a nest egg established, you could use your income tax refund to start one. The older you get, the larger your nest egg should be, so adding to it never hurts. To learn more about what a nest egg is, check out our blog, “The Nest Egg”.
Set Up or Add to an Emergency Fund
An emergency fund covers unforeseen expenses, such as medical bills, car repairs, or job loss, without resorting to credit cards or loans to keep you afloat. A good rule of thumb is to have at least three to six months' worth of living expenses set aside in an emergency fund. Using your tax refund as a starting point can make the process less intimidating. Your emergency fund will provide peace of mind in times of crisis.