That dreaded tax deadline is almost here. If you don’t already have everything done, you’re probably scrambling like crazy to actually do your taxes or frantically emailing the accountant. Thankfully, it will all be over soon. And when it is, there’s only a one thing left to decide on: What are you going to do if you get a refund?
“Spend all of it!” is probably the first thing that comes to mind. I can’t blame you. I love to shop. But this may not be the best decision. As a millennial who is not in the finance industry, here is what I keep in mind during tax season:
Save it and Forget it.
This is something my family members always tell me to do (and I try my best to listen to it). You never know what’s going to happen tomorrow and you may need that money later on. Drop it in the savings account and completely forget that you ever saw it. That way, it should be around when you actually need it or when you want to save for a big purchase.
Added bonus: If you forget it ever existed, you can’t throw it away on a 3-D printed comforter or something else you don’t need.
Spend on the Right Things.
If you absolutely must spend some of it, which I don’t recommend, make sure it’s only a small percentage and spent on something worthwhile.
Let’s say you got $1500 back and are just $100 shy of meeting your savings goal for that big summer vacation. Since it is a small amount of the whole refund (15 percent) and is something you were in the middle of saving for anyway, it makes sense to spend the $100 and save the rest.
Remember, spending money for the sake of spending money is never a good idea. You’ll end up like Carrie Bradshaw with a closet full of designer duds and none in your bank account. #SexAndTheCity
Want another example? We’ve talked about buying vintage before and you all know I would be more than tempted to spend it on a Chanel flap bag. Authentic, classic pieces like this or a Hermes “Birkin” bag tend to hold their value. (Read these two articles from Who What Wear for specifics.) So, I understand saving to buy one. But, if you couldn’t afford it without the tax refund, I wouldn’t get it. That can mean you don’t usually have the money and may need those funds for something more important later on. Bills and necessities always come first.
After all is said and done, the decision is one only you can make. I just recommend doing your research, checking everything against your personal finances as well as weighing the pros and cons of each option.