Big Money: 5 Ways To Use Your Income Tax Check That You Can Be Proud Of Later

It’s that time of year folks! But before you go and spend your tax return on Pokémon cards, take a look at 5 other ways you can use that money instead!

1.Pay off Debts Strategically

When it comes to finances there’s no better feeling than being debt free.

Do you know how to get a idea of your net worth? If not here’s a explanation that’s easy to understand.

Net Worth

A individual’s net worth can be calculated by adding up how much they own (assets) and subtracting from that number how much they owe to others (liabilities).

So a quick way to find your number would be to tally up all of your debt :

Student loans
Consumer debt
Credit card debt
Etc.

Then tally up all the things you own (paid off items) such as :

Home
Car
Electronics
Clothes
Other possessions
Etc.

Lastly subtract the total debt from the total asset value. That is your approximate net worth. Hopefully it is a positive number!

Example

Let’s use Mark as a example. Mark’s assets total $1000 in value.

Mark’s total debt is $3000.

So when we subtract his debt from his total value of assets, we find out his net worth is -$2000 dollars.

How To Pay Off Debt

But what does all that have to do with paying off debts strategically?

If you have more debt than asset value, then your net worth was a negative number. This means you need to prioritize paying off debts.

To do this strategically, I’d recommend paying off the debts according to which one has the highest rate of interest and go from there.

Financial freedom and being debt free are more attainable than you think!

Having little to no debt allows you to keep more money in your pocket.

2.Emergency Savings

Saving or “paying yourself first” should be near the top of everyone’s list of priorities.

So what’s the difference between #2 and #3 on this list?

A emergency savings is money set aside to take care of unexpected expenses.

A savings account is money being saved for a specific and planned purpose.

A starter emergency savings of at least $1000 is recommended by many people in the financial community including Dave Ramsey.

Once you have that saved, you can begin to build towards an emergency savings of 3-6 months of essential living expenses.

Injuries, vehicular accidents, and pandemics (looking at you Covid-19) can happen out of nowhere. Save money today, and you’ll be glad you did later on.

3.Stash It Away In Your Savings

Everyone can appreciate having some money tucked away.

Here’s the option most people probably assumed this blog would’ve mentioned first.

Save your money.

While this option is good, there are a few other things to consider first such as the ones we’ve mentioned. But once you’ve done those, you should consider putting money into your regular savings account.

Since you already have a emergency savings fund started, this money can go towards other things such as:

A down payment on a home or property
Purchasing a vehicle
Paying for schooling
Home repairs or renovations
A child’s college funds
Vacation
Wedding expenses
Etc.

4.Give

It’s better to give than to receive. Think about that for a moment.

The Bible tells us it is better to give than to receive.

Acts 20:35 KJV
[35] I have shewed you all things, how that so labouring ye ought to support the weak, and to remember the words of the Lord Jesus, how he said, It is more blessed to give than to receive.

Why? Well first you get a satisfied feeling knowing you are able to help someone else in their time if need.

Secondly, (due to the fact that you are able to give in the first place ) it shows just how fortunate you really are.

No matter how little you think you earn, if you can afford to give anything you are blessed.

5.Start Your Own Business

Have you ever wanted to do something you loved and get paid for it?

This tip means a lot to me especially because it’s something I’ve done myself.

During Covid in February 2020, I officially started A Step Above. My business is one that focuses on premium shoe care.

How did I fund it you ask? With a small portion of my income tax check. $400 to be exact.

And how is business going you ask? Well let’s just say I’ve made my initial investment back many times over. God is good.

Do you have a good business idea? Now is the time to make it become a reality!

Some business related things you can spend a portion of that check on include:

A domain name for your website
Apps to create graphic designs and logos
Business cards from Vista Print
Supplies & Materials
A uniform for your new business
A company sign
Etc.

Think big and make something happen! Remember everyone starts somewhere.

Find a way to provide value to others and the money will follow. Be great at whatever you decide to do.

Bonus : Make a Meaningful Purchase

What’s that item you would buy right now if you had the money?

This list wouldn’t be complete if you didn’t enjoy at least a portion of this money. So this is your opportunity.

But before you spend think to yourself : “What is something that will add value to my life”?

Are you an aspiring blogger? Perhaps a new laptop will be the right fit.

And avid runner? Then consider a new pair of running shoes that are comfortable and sleek.

Are you a music junkie? Then you should take a look at some noise-canceling headphones that allow you to get lost in the music.

The key is to find something you do/enjoy everyday. Then purchase something that will amplify it (music pun) and make it better.

Conclusion

If you’ve read closely you’ll see there are lots of productive ways to spend this years check.

Remember that this is not free money, but your money. Because you overpaid in taxes last year, you are now getting a refund this year.

You worked hard for it, so be sure to put it to good use.

Until next time my friends!

Posted By: Jeffrey Chark · In: Smart Money