To spend, or not to spend? What you should do when you get your tax refund
RAPID CITY, S.D. -As the tax filing deadline approaches on April 18, many people are looking forward to having a little extra cash. However, it’s important to think about how you should and shouldn’t be spending your tax refund, especially if you’re fortunate enough to get one.
Split Your Refund into Pieces
According to Saeed Sulaiman, owner and financial advisor of Shield Financial, “It’s not a good idea to go crazy. What I have found to be the best thing to do is to help both sides of the brain there. You want to be responsible. But if you know you want to have fun and you’re worried that you’re just going to blow the whole thing, just cut it up into pieces.”
Sulaiman suggests splitting your return into pieces to spend on various items. By doing so, you can help both sides of the brain – being responsible and having fun.
Pay off Debt
One of the top priorities when it comes to spending your tax refund should be taking care of debt – especially credit card balances.
Sulaiman explains that it would be a good idea to use all or most of your refund to pay that down as much as possible. Which will reduce your interest payments and improve your credit score.
Make Conscious, Educated Decisions
“It’s a good idea to sit down and make conscious decisions,” says Sulaiman. “Hey, I’m going to spend this much and that’s okay, and I’m going to save this much and I’m going to spend on debt with this much. So as long as they’re conscious, educated decisions, I feel like that’s a good route to go.”
It’s important to make conscious, educated decisions when it comes to spending your tax refund.
After you figure out how much you are able to spend on entertainment, You could put the rest somewhere it will earn interest. By doing so, you can make your money work for you and earn more over time.
“At the end of the day, it’s your money. You make the decision, you make the decisions for your money. But it’s a good idea to make decisions that your future self will thank you for. If you want to help the immediate you and you want to help future you as well,” said Sulaiman.