Perhaps the best part of paying taxes is getting the tax refund. Now, for the average tax payer, a tax refund may be nothing more than just extra cash. This is all well and good. But perhaps you should consider directing that money towards something that could help you make more money in the future, particularly if you are not in a very good place financially. Here are a couple of ways to make more money when you spend your personal tax refund:
Pay Off Your Debts
Paying off your debts is a wise way of spending your personal tax refund. For instance, you have a balance of $2,000 on your credit card. Let’s say that the minimum monthly balance is $50 and the interest rate is 28.8%. it would take you 300 months to pay off that debt. If you direct your refund towards paying your credit card debt, you can save yourself $12,481.62 in interest.
Make an Investment
Making an investment is another smart way to spend your personal tax refund. You can put your refund into stocks, bonds, or other paper assets. If you current economic situation is discouraging your from making such investments, you can leave your money in a high interest bank account or buy GICs. Or you can invest in mutual funds or top up your work pension contribution. It all depends on what you consider an investment. The key is to make your money work for you instead of spending it on unimportant items. Here is another example: if you take $2,000 and put it into a mutual fund that earns 8% annually, you will get $14, 68.35 in 25 years. That figure is more than seven times the amount of your original refund.
