If you’re one of the over 70% of tax filers expecting a refund, you may feel the impulse to celebrate and spend it on something extravagant. Or, you may be worried about the future and want to invest it or just tuck it away for safekeeping.
What would you spend your refund on? Results of a survey by the National Refund Federation showed that 12% of Americans said they would spend their tax refund on a home improvement project and 10% said they’d spend it on a major purchase, like a car. Only 8% of respondents said they planned to spend their refund on a vacation or a splurge type of purchase.
Here is what we know about last year’s tax season: According to updates to the IRS cumulative 2021 tax filing season statistics, 128 million refunds were issued, 3.1% more than the prior year, totaling $355 billion. The average refund was $2,775, which is a jump of 11.2%!
No matter what amount you may have coming to you, it’s fun to think about how to use it. Here are seven practical ways for spending your tax refund.
Use your tax refund to buy a used car
If that big-ticket item seems out of reach, a sizable downpayment can go a long way to helping with that purchase. Your refund may not be enough to cover the entire cost of a new or used car, but it could be a great down payment. Browse some of the top used car buying sites to get started. Don’t limit yourself to local searches only. If you find an affordable used car out of state, contact Montway Auto Transport to have it shipped to you. Already have a car in mind? Get an instant car shipping quote or call us at 866-494-1477.
That rainy day bank account could come in very handy if your refrigerator breaks, you have a medical emergency, damage your cell phone or get into a major fender bender. Many financial experts recommend saving an amount equal to three to six months of basic living expenses. While that may sound daunting, you can start now with your recent tax refund and try to add to it each month. If you already have an emergency fund, then make sure it can cover the full six months of potential expenses.
Fitness and fun
The beginning of the year is always a great time to renew (or pledge) your commitment to exercise and wellness. Maybe it’s a chance to take a CrossFit class for the first time, buy a few personal training sessions, enroll in a vegetarian cooking class with a friend, unwind in a hatha yoga studio or get a new pair of running shoes and start hitting the trails. The ways to focus on your health while enjoying yourself or time with friends are endless.
Fund career goals
There’s no better investment than yourself. If you’ve been wanting to add to your professional skill set with a certification or endorsement, now may be the right time. To give yourself a boost, you could also hire a career coach, take a few courses at a community college or local university, or even launch your own business if that’s a dream of yours that’s been on hold.
Find financial freedom
Have a loan to repay? Or balances on high-interest credit cards? Paying down or paying off credit card debt is definitely worthwhile. For example, according to NerdWallet, eliminating $2,200 of credit card debt could save you $3,585 in interest, if you continued to just make the minimum monthly payment. If your refund doesn’t quite cover your balances, you may want to try to find a lower interest rate card.
If you’re a homeowner, you probably have a list of items that need fixing or improvements you’d like to make. Replacing an old roof or windows now could save you money by lowering energy bills. Maybe you’d like to get the kids an outdoor playset or that new stainless steel stove. Even a fresh coat of paint can completely update a room. If you’re into trends, Sherwin-Williams declared Evergreen Fog the color of the year for 2022. Why not try it?
Support a charity
Helping others is a great way to spend both your time and a bit of your tax refund. Donating to a local food bank or shelter can also have a positive impact on your own community. Perhaps you have a cause that’s meaningful to you that could use your donation to advance research or enhance resources. Be sure to keep receipts and records of your charitable giving as donations can help reduce your tax burden for the following year.
Haven’t completed your tax return yet? Check out these steps taxpayers can take to make filing easier in 2022.
Montway Auto Transport
If you plan on putting your refund towards the purchase of a new or used car and the seller is located out of state, consider a professional car shipping company to get it to your door. Montway Auto Transport is the leading car shipping company in the U.S. and has transported nearly 200,000 vehicles in 2021. We’ll work with you to find the option that best suits your needs and budget. Request a free car shipping quote or call 866-494-1477 to speak with a Montway agent.