Do whatever you want with that tax refund

Tax season is around the corner and every financial professional wants to tell you what to do with your tax return. Not that it’s not important to dispel such advice. Every year, 77 percent of Americans receive a refund. That’s a high portion of people receiving money back from their hard-earned money. So, what you do with it can either help or hinder your own finances and the economy at large.

The common wisdom out there is that you should save that refund, although it may not always be in the sense of placing it all in a savings account. We’re being told to pay off our debts, open a retirement fund, or just leave it tucked away in an interest bearing account somewhere. That’s sound advice, especially since many Americans are overwhelmed with debt (no, you’re not alone).

I believe it’s a personal decision. I have a problem with unsolicited advice that offers a one-size-fits-all solution to everyone’s problems. Of course, the wise thing to do if you’re in debt is to pay it off. It’ll give you the opportunity to finally clean up your finances and not have to worry about all the interest that’s tacked on to that outstanding debt. In the long run, you wind up owing a lot less than you would if you delay paying that money back and that’s extra money in your pocket you can use.

But if you’re at a place where you feel comfortable with where you are at the moment, go ahead and do what you want with that refund. Just keep the future in perspective as well. If you haven’t opened a retirement fund, then go ahead and do that. If you haven’ started investing, take some of that refund and start investing. Your future is at stake, and you’ll feel better knowing that you’re securing it. The earlier you start saving, the more opportunities you’ll have in the future to treat yourselves.

Once you’ve established a nice investing cushion to protect your future, and have a little extra to turn to when an emergency arises, it’s okay to spend some of that refund on yourself. Just be wise about how you do it, and avoid any decisions based on emotional impulses. You’ll like yourself better and eventually retire a lot happier than many people.