How to WASTE Your Tax Refund
In our first blog post of the month, we offered up some ideas for using your tax refund wisely. However, we know it’s tempting and more fun to splurge and be reckless if you find yourself with a tax refund from Uncle Sam. Lincoln Savings Bank (LSB) has your best interests at heart, so we feel compelled to list out the following no-no’s when it comes to your tax refund.
Spending it instead of investing it- yes, going shopping is fun and literally addicting. But try this idea on for size: if you invest your tax refund every year for 20 years, that amount plus the interest it earned may help you retire earlier. Which would you choose: a shopping trip or an extra year or two of paid vacation?
Spending it instead of paying off your debts- every dollar in interest you pay to your credit card company makes them richer; every dollar of principal debt you pay off makes you richer. Need we say more?
Spending it on things that won’t help you come tax time next year- if you must shop, purchase something that can get you a tax credit. For example, an energy efficient water heater can set you back a large initial amount. However, over time you’ll be saving on your energy bill. Residential geothermal heat pumps and solar-power systems installed before the end of 2016 also qualify for a separate 30 percent credit.
Not using it to improve your self- as we’ve said a million times before, you are your most important resource for earning potential. Investing in yourself, whether it’s classes, a device or program that helps you do your job better, or even newer work clothes for a more professional look, is never a bad idea.
If you’ve been dreaming of a shopping spree with your tax refund, it’s wise to reconsider. Make sure you have your financial priorities down first before satisfying your “wants.” Lincoln Savings Bank hopes these ideas help you spend your tax refund wisely this year!
Lincoln Savings Bank, member FDIC