There's nothing to be happy about receiving tax refund.
After all, it's your own (hard-earned) money coming back to you. It's NOT a Bonus! NOT a Gift! NOT a Reward!
Wise men and women have realized this truth. So, they put this money to the best use. Unlike those who treat tax refund as a "treat", they don't squander it away on wasteful expenses, needless extravagance or useless luxuries.
Fortunately, there are MANY smart options to get big bang for EVERY buck. Listed below are some of the common ways of achieving it.
BY THE WAY: Most of the suggestions are quite obvious. You don’t really need me to advise you on the same. However, the problem is that people rarely do the obviously useful things with their money. So they need to be cautioned — time and again — against splurging. This blog post is, therefore, more of a warning against reckless spending than a set of unique ideas.
1. Add it to your Emergency Fund, if the same is running low.
2. Invest in Balanced Mutual Funds for goals 3 to 5 years away.
3. Invest in Debt Mutual Funds for goals 1 to 3 years away.
4. Invest in Equity Mutual Funds for long-term goals, more than 7 to 10 years away.
5. Spend it on long-pending and much-needed home renovation, repair or repainting.
6. Make a donation to your preferred charitable cause.
7. Put the refund in tax-saving investments, and claim tax deduction for the year.
8. Add it to your children's Education Fund.
9. Pay off your outstanding bills and stop all further late fees and penalties.
10. Invest in yourself. Pay for the training programme that would upgrade or add to your skills.
11. Invest in your spouse. Your life partner too should be upgrading his/her skill set.
12. Don't let it sit idle in your Bank Account; else it will soon disappear among the day-to-day expenses.
13. Clear the credit card outstanding amount, which you are carrying forward every month; and slash your interest cost.
14. Give it to your kids. Teach them how to deposit it in a bank and earn interest on it.
15. Use it for the annual servicing and maintenance of your car.
16. Replace your old laptop, mobile phone, washing machine, refrigerator or similar such useful gadget / home appliance.
17. Prepay your Personal Loan and lessen the interest burden.
18. Keep it aside for any birthday or anniversary gifts to be purchased in the coming few months (if not already budgeted for).
19. Get yourself and your spouse a health check-up that you might have been putting off.
20. Keep it aside to be later used as a down-payment for any proposed car or home loan.
21. Take your dentist’s appointment which you may have been deferring for months.
22. Pay the gym fees that you have possibly been avoiding for long, and get back to the fitness routine.
23. Tax refund is a one-time inflow of cash. Don’t use to buy insurance — as you get tied to something that requires premium payment every year.
24. Bring down the home loan outstanding, if paying installments is a stress every month.
25. Invest 5-10% of the refund amount in gold ETF.
26. Use it to pay this year’s property tax and / or the annual house maintenance charges.
27. Rebalance your portfolio. If you are overweight on debt, invest in equity. If you are overweight on equity, invest in debt.
28. Add it to your Retirement Fund.
29. Hire a financial advisor if you are unable to make the right choice 😉 (Disclaimer: As a financial mentor, I am the interested party here).
30. Lastly, do splurge your tax refund — WITHIN REASONABLE LIMITS. After all, to use the cliché, ‘All work and no play makes Jack a dull boy’.
Of course, this is just a representative list of how you can utilize your income tax refund in the most beneficial manner. I am sure you can add lot more ideas to the same. Just remember to turn it into something useful. Don’t let the money vanish into thin air and then regret.
Also read more about When Is the Right Time to Start Tax Planning?
After all, it's your own (hard-earned) money coming back to you. It's NOT a Bonus! NOT a Gift! NOT a Reward!
Wise men and women have realized this truth. So, they put this money to the best use. Unlike those who treat tax refund as a "treat", they don't squander it away on wasteful expenses, needless extravagance or useless luxuries.
Fortunately, there are MANY smart options to get big bang for EVERY buck. Listed below are some of the common ways of achieving it.
BY THE WAY: Most of the suggestions are quite obvious. You don’t really need me to advise you on the same. However, the problem is that people rarely do the obviously useful things with their money. So they need to be cautioned — time and again — against splurging. This blog post is, therefore, more of a warning against reckless spending than a set of unique ideas.
1. Add it to your Emergency Fund, if the same is running low.
2. Invest in Balanced Mutual Funds for goals 3 to 5 years away.
3. Invest in Debt Mutual Funds for goals 1 to 3 years away.
4. Invest in Equity Mutual Funds for long-term goals, more than 7 to 10 years away.
5. Spend it on long-pending and much-needed home renovation, repair or repainting.
6. Make a donation to your preferred charitable cause.
7. Put the refund in tax-saving investments, and claim tax deduction for the year.
8. Add it to your children's Education Fund.
9. Pay off your outstanding bills and stop all further late fees and penalties.
10. Invest in yourself. Pay for the training programme that would upgrade or add to your skills.
11. Invest in your spouse. Your life partner too should be upgrading his/her skill set.
12. Don't let it sit idle in your Bank Account; else it will soon disappear among the day-to-day expenses.
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| Don’t create bubbles out of your Tax Refund. Poof and it will be gone. |
13. Clear the credit card outstanding amount, which you are carrying forward every month; and slash your interest cost.
14. Give it to your kids. Teach them how to deposit it in a bank and earn interest on it.
15. Use it for the annual servicing and maintenance of your car.
16. Replace your old laptop, mobile phone, washing machine, refrigerator or similar such useful gadget / home appliance.
17. Prepay your Personal Loan and lessen the interest burden.
18. Keep it aside for any birthday or anniversary gifts to be purchased in the coming few months (if not already budgeted for).
19. Get yourself and your spouse a health check-up that you might have been putting off.
20. Keep it aside to be later used as a down-payment for any proposed car or home loan.
21. Take your dentist’s appointment which you may have been deferring for months.
22. Pay the gym fees that you have possibly been avoiding for long, and get back to the fitness routine.
23. Tax refund is a one-time inflow of cash. Don’t use to buy insurance — as you get tied to something that requires premium payment every year.
24. Bring down the home loan outstanding, if paying installments is a stress every month.
25. Invest 5-10% of the refund amount in gold ETF.
26. Use it to pay this year’s property tax and / or the annual house maintenance charges.
27. Rebalance your portfolio. If you are overweight on debt, invest in equity. If you are overweight on equity, invest in debt.
28. Add it to your Retirement Fund.
29. Hire a financial advisor if you are unable to make the right choice 😉 (Disclaimer: As a financial mentor, I am the interested party here).
30. Lastly, do splurge your tax refund — WITHIN REASONABLE LIMITS. After all, to use the cliché, ‘All work and no play makes Jack a dull boy’.
Of course, this is just a representative list of how you can utilize your income tax refund in the most beneficial manner. I am sure you can add lot more ideas to the same. Just remember to turn it into something useful. Don’t let the money vanish into thin air and then regret.
Also read more about When Is the Right Time to Start Tax Planning?
