With tax season right around the corner, you’re probably dreaming of getting a big fat check from the IRS. While getting bonus money is always a great feeling, too many people run out and spend the check before it even deposits in their bank accounts.
Rather than blowing your IRS return this year, look at 4 things you can do with your check that will actually benefit you for more than a couple hours of retail therapy.
1. Save it
This seems like the most obvious choice, but it’s surprising how few people save their tax returns. Saving the money is a great way to start your emergency fund or grow your nest egg for retirement. Whether you’re getting a couple hundred dollars back or a couple thousand dollars back, your IRS return is often an unexpected windfall that can often do more good sitting in the bank than burning a hole in your pocket.
Consider saving it in a high-yield savings account or putting it into a CD or money market account. You’ll not only earn better interest on the funds, you’ll also have it locked away somewhere that you won’t be able to touch it.
2. Invest it
If you’ve always wanted to get into the stock market, your IRS return may provide you with the perfect opportunity. Buy up shares in a start up or snag a piece of a tried and true company with your return and revel in the knowledge that you are now an investor. If this is the route you want to take, start planning your move early, so you can be ready to strike while the iron is hot and the check is unspent.
3. Donate it
Many people don’t realize that this year’s return will be taxable income on next year’s return. It seems silly, but what would you expect from the IRS? Instead of spending it on something, paying tax on the item and then paying tax on the return next year, why not donate it and take the charitable contributions write off? If your return isn’t very large, this could be your best option.
4. Buy something that will last
If you don’t trust banks and you’re not feeling very giving, at least spend your return money on something that will be of more value tomorrow than it is today. Gold and other precious metals are a great investment. However, don’t run to your local jeweler to make a purchase. Instead, go to a gold purchasing firm or even a pawn shop to get a better deal on something that’s both pretty and valuable. Later, if the economy goes farther south, you’ll still have something worth value.
These four suggestions will help you come up with a good way to spend your IRS return. You work hard for your money, and anything you get back from the IRS is still money you worked to earn. Don’t squander your return, use it as an opportunity to save or invest in your future.