- Many people use their tax refunds to better their financial situations.
- You may want to use yours to advance your career and set yourself up for a higher paycheck.
You can use your refund to further your career.
At this point, the April 18 tax-filing deadline has already passed, and ideally, you managed to get your return in on time. If that's the case, it may only be a matter of days or weeks before your tax refund hits your bank account.
Many people look at tax refunds as free money and are tempted to use that cash to splurge on something fun. But a tax refund isn't free money. Rather, it's money you earned but never collected. And so a better bet may be to put that cash to good use.
Now to that end, there are different factors to consider. If you don't have a fully loaded emergency fund -- one with enough money to pay for three full months of living costs -- then it pays to stick your tax refund directly into your savings account.
Next, you should assess your debt. You don't need to use your tax refund to pay off your mortgage early (unless that's a goal of yours). But if you have a credit card balance hanging over your head, it pays to use your refund to knock it out, as doing so could save you a lot of money on interest.
But let's assume you're set with emergency savings and you don't have unhealthy debt. At that point, it still pays to make the most of your refund -- by investing it in yourself.
Could your tax refund set the stage for a more rewarding career?
Perhaps you lack certain skills needed to climb the ranks at work or move into the role you'd like to have. Or maybe you've landed in the wrong industry, but you need to develop specific skills to make a switch.
If you're sitting on a generous refund, you have a prime opportunity to invest in yourself and take steps to not only further your career, but also set yourself up for a higher paycheck. After all, that refund could pay for an online course that teaches you the skills you need. Or, it could pay for a few conferences and networking events that allow you to meet people who can help you get your foot in the door at a new job or in a new field.
You might even use your refund to invest in tools that will make you better at what you do. For example, if you work in IT, you can use your refund to buy a server you keep at home and use that equipment for professional development purposes. If you're a graphic designer, you can invest in a new monitor that makes it easier to experiment with different approaches.
Set yourself up for success
Sometimes, it takes money to make money -- or make more of it. And that's why it pays to use your refund to boost your skills and set yourself up for a higher paycheck.
But even if that's not your goal or intent, you can still use your refund to position yourself for a job that's more rewarding. And if that new job doesn't pay you a dollar more, that's okay. You deserve to take pride in the work you do and get some enjoyment from it. And if your tax refund allows you to make that sort of switch, there's nothing wrong with that.
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