Many Happy Returns: Why You Should Spend Your Tax Refund Wisely

Plenty of ardent and conscientious taxpayers circle April 15 on their calendar, not so much as a reminder that they'll be shelling out serious cash but rather the federal or state government sending a few extra dollars their way. The always revered and often mismanaged tax refund check takes center stage as the filing deadline already is on the mind of the masses. Whether you file online or gather up your receipts scattered throughout your home and have them sorted by an accountant isn't so much the pressing issue as far as what you end up doing with that money once you have it in hand. As much as you tell yourself you're going to save the money or invest it consciously, you end up with that Jet Ski you'll never use or that ubiquitous car stereo that you only turn on occasionally while driving. Misspending your tax refund is just the financial version of spinning your wheels. That money, regardless if it’s a few dollars or thousands, isn't “found” money, but often it is treated as such. Those who pay particular attention to their budget know that the money they receive before or after April 15 in the form of a refund check can do more good than harm if it's spent wisely and with justification. You may argue that you deserve a vacation or want to have that new car finally, and those purchases aren't exactly forbidden if you can honestly say you're in a financial position to spend that way. If your savings account either is dwindling or you don't have one at all, you might want to consider opening one instead of lavishing yourself with a spa trip or vacation package. That tax return income also could be used for household repairs you've been putting off, the kind of fixes that only add value to your home. You can add equal amounts of value to your credit score and stand as well if you take that money and start paying down some of your debt. Of course, that spending spree hardly matches buying a new wardrobe, but it could be the difference between a lower rate on a car, house or having your credit cards cut right before your eyes. It's hard not to get excited in preparation for that tax return check to be delivered to your door or neatly deposited in your account within a few days if you file online, but your jubilation should be met with poise and practicality, along with the wherewithal and understanding that cash in hand from “Uncle Sam” shouldn't translate into foolish purchases.

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