Time to wipe some sweat off your brow. April 15th has passed and you finished filing your income taxes. You might have received a hefty tax refund. With a large sum of money now available for you to use, you might be tempted to splurge on a big purchase for yourself or your family. Recently, I took to the internet to find some unconventional and interesting ways people were spending their tax refunds. These are some ways you might NOT want to spend your tax refund:
- Liposuction. This may surprise you but this cosmetic procedure is actually pretty affordable with a decent tax refund. If you do a quick search online, you’ll find many stories of people using their refund for this very purpose. Remember, just because it’s in your price range suddenly, doesn’t mean it’s smart to splurge. Instead, think of some less expensive and safer alternative ways to take care of your body.
- Gambling. Casinos are a popular destination in the gambling market. In fact, they make up one-third of the billion-dollar industry. It’s important to note that any gambling winnings are also fully taxable and you must report them on your next tax return. Taking a chance on losing your hard-earned dollars in one night might have you hating yourself the next day.
- Illegal shopping spree. A 25 year old woman from Oregon claimed $3 million in earnings and used Turbo Tax to claim a refund of $2.1 million dollars. She then proceeded to go on a shopping spree, and spent more than $150,000 buying a Dodge Caravan, new tires and wheels, and various household items. Blowing your tax refund at the mall might not be the smartest thing to do, especially if those funds were illegally acquired.
- Overpriced vacations. It’s vacation season and a lot of destinations are taking advantage of the increased tourism to jack up prices. If you are vacationing in a tourist area, you are generally paying a premium for everything, including your housing, food, and even toiletries. If you want to save on costs, consider doing some grocery shopping prior to hitting the road, and keep a cooler for picnic style lunches. You’ll make yourself and your wallet happier if you pack more consciously.
- Student loan refunds. Undergraduates can make a habit of using excess financial aid money to spend outrageously. Some not-so-smart ways include: new car, expensive clothes, huge televisions, spring break vacations, stereo equipment, and more. These kinds of impulse purchases make for destructive financial decisions in the future. Instead, use this cash to pay down any debt… like student loans!
If you were shocked or surprised at any of these tax refund purchases, then hopefully, you can use better judgement and think smartly about how to allocate or invest your extra funds. Here are some smart ways to get the most out of your hard earned cash:
- Open an emergency account. Financial emergencies can happen anytime. What would happen to you if you got in a motor vehicle accident, or you lost your job? A large tax refund is a great start to an emergency account. You should plan for three to six months of living expenses in this account.
- Donate to a charity! Helping give back to your community is a wonderful thing, and you can support causes that you are passionate about! If you have extra change building up around the house, cashing in at a Connex coin-cashing machine helps raise funds for a good cause. With a low 5% fee for members and 7% fee for non-members, 100% of these collected fees are donated to various organizations, including animal shelters, food banks, youth groups, and more. Click here for locations and more information.
- Pay for repairs. After a long winter, your car or house might have taken some damage. Use your tax refund to help fix and maintain your most expensive possessions. If you need extra funding to start a home project, remember that Connex offers Home Equity Loans and Home Equity Lines of Credit
Whatever you decide to use your income tax refund for, just remember- your personal finances are very important to keep on top of. Start thinking smarter about your financial goals. You can visit https://www.connexcu.org/home/member/advocacy or stop in any Connex branch to speak to a Financial Advocate today to create a plan for improving your financial life.
-Spencer Price, VP of Unbanking