Now that you have your tax refund (or have paid your additional income taxes due and have some cash left over), what should you do with the money?
I can appreciate that you might feel a strong urge to use this "windfall" to splurge on anything from a night on the town to a new car. Maybe a trip to the beach for a couple of days. Why not?
Well, I'm not a fun hater, and I'm not here to tell you what to do. However, consider how you are doing on the Five Financial Foundations.
- Do you have a cash reserve account for emergencies?
- Are you funding your retirement plan at work or your IRA?
- Do you have an account for a future major purchase, like a car or a house down payment?
- Should you pay down (or pay off) some lingering debt?
These are questions that the money-savvy people I've known have asked themselves.
Perhaps the best solution, and one that I favor for myself, is to save some, invest some, and spend some of the money.
Make the right decision for you.