Yay, taxes! While the task of filing your taxes isn’t always enjoyable, we sure do get excited about the shiny tax return coming our way. You may be asking yourself, “How do I spend my tax return? Should I be practical and upgrade that aging washing machine? Or splurge and treat myself to a much-deserved vacation?”
To help you get the most out of your tax return in 2021, we have some tips on ways to spend, save and splurge.
Please note, we are not financial advisors. This article is strictly our opinions. You should always consult a professional before making investments or purchases.
Smart ways to spend your tax return:
Before heading to the mall or opening up your Amazon app, consider taking a portion of your tax return for savings, investments and debt removal. Here are the top ways to spend your tax return wisely.
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Pay off outstanding debts or bills.
Tax returns are a great opportunity to pay off outstanding debts that are accruing interest each month. Debt experts say it is most beneficial for the long term to pay a large amount on your debt with the highest interest versus spreading the money around only paying a little to each debt owed.
This is also a great time to pay future bills. Even though the bill hasn’t come, you know it will, every month like clockwork. Consider making an extra monthly payment to your mortgage or car loan. You can lower your financial stress in the future by paying down on these types of debts and bills.
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Create an emergency fund (or add to it!).
Life happens and it’s much easier to handle those unexpected expenses when you have a dedicated emergency fund. Many experts suggest that you have a minimum of three months of living expenses set aside. That total may be unattainable this year, but it is better to start saving towards this amount now rather than after the emergency has come. You will have peace of mind knowing you are prepared for the unexpected.
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Invest in your future.
Another wise way to spend your tax return is investing in your future. This could mean purchasing a life insurance policy, starting a retirement fund or even investing your money into stocks and bonds. Depending on your age, the risk you are willing to take will vary, but no one will regret setting money aside for the future. Be sure to do your research and speak with a financial advisor before any new investment ventures.
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Invest in yourself.
Depending on your circumstances, investing in yourself could mean spending money now or saving it for later. Right now, you could sign up for an online class to grow your skills. Why not kickstart the new business venture you have been considering? Maybe it is time to hire a professional coach or another self-improvement investment. Contributing to your personal and professional growth is a solid investment.
Investing in yourself might also mean saving your money for a future purchase, like a home or car. You could also create an opportunity fund. If the opportunity to go on a girl’s weekend or guy’s getaway arises, you have set aside the funds to participate. Take time to think through the best way to invest in yourself right now.
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Plant seeds for your children’s future.
It’s never too early, or too late, to start thinking about your children’s future and wellbeing. Starting a car fund or college savings plan now will lighten the financial burden in the coming years. This is also an opportunity to teach your kids about saving. If they are old enough, you can encourage them to regularly set aside a portion of their allowance and birthday money into these savings accounts. (They will thank you when they are older!)
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Finish (or start) home repairs or upgrades.
Making upgrades or repairs to your home is another way to spend your tax return wisely. Now is the time to replace the damaged window in the guest room you keep putting off. Maybe your back patio needs a fresh coat of paint. Think about what repair or upgrade will bring the biggest return on investment in your home’s long-term value.
You may also consider investing in your home office. With many business professionals continuing to work from home, even on a part-time basis, you could purchase yourself a new chair, desk or laptop to make for a better at-home office.
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Donate to a charitable cause or organization.
Last year was a struggle for everyone. You won’t regret using a portion of your tax return to make a difference in some else’s life this year. St. Jude’s Children’s Hospital, the ASPCA and Samaritan’s Purse are national charity organizations you could contribute to. Also, consider donating to a local organization like a food bank or animal shelter.
Fun ways to spend your tax return:
Once you have made your wise investments, it’s time to splurge! As you will read later in our best practices section, we don’t think it wise to splurge your whole tax return, but taking a portion of your return to spend on wants instead of needs is okay in our book. Here are a few ideas for how to have fun with your 2021 tax return.
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Splurge on little luxuries.
Treat yourself this tax return season with a little luxury you normally wouldn’t be able to afford. Sign up for a wine tasting class. Go out for coffee and dessert at the best restaurant in town. Buy yourself a new outfit. Enjoy a massage or spa day. Plan a special date night with your significant other.
*Tip: To help keep your luxury spending in check, determine an exact amount you want to splurge. Once it’s gone, luxury spending stops.
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Pay it forward.
We put “charitable spending” on both of our lists because this one is a little more spontaneous. You could pay for the meal of the car behind you in the drive-thru. Pick up the tab of the family next to you at dinner. Buy your neighbor a sweet treat and leave it on their doorstep. Leave an extra tip at your next meal out. If you are on the lookout, you will notice opportunities all around where you can pay it forward and bring a smile to others around you.
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Grow your hobby.
We all have those items we want to buy but normally can’t afford. Now is the time to splurge on an item from your wish list. Buy the new golf club you have had your eye on. Update your supply of paints and brushes for crafting. Splurge on the new yoga mat. Who knows? Your hobby may turn into your business in the future with the extra funds you have been able to invest.
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Take a vacation.
Traveling is another fun way to spend your tax return. Plan a week-long vacation, take a weekend getaway with the family or both! You might not be heading out tomorrow, but now you have the funds to plan a nice vacation for you and your family to enjoy. You could take a trip to discover eclectic Austin. Soak up some rays in Virginia Beach for a weekend. Maybe you want to ski the Rockies in Denver.
No matter which destination you choose, InTown Suites has you covered! We have affordable accommodations in 188 locations across America, so you don’t have to choose between practicality and your vacation dreams. You will save money no matter where you choose to travel.
Our rates are not only affordable but also flexible, letting you book your stay for as long as you need. Some locations even offer Monthly PLU$ Rates that let you save big by paying for your stay in advance. We’ll help you save with every cross-country vacation destination.
If you’re looking for vacation ideas that’ll stretch those dollars even further, here are our top 10 spring vacation destinations and our top picks for the best cities to visit in 2021.
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More splurging ideas.
If you need a little inspiration, we’ve asked our InTown Suites staff and property managers how they plan to splurge. Here are some of their plans for spending their tax returns:
- “Take my mother on a cruise for her birthday.”
- “Rent an RV for a week to attend the Georgia/Florida game in Jacksonville this year! GO DAWGS!”
- “Pay for my college son’s rent and put money down on a car for my other son.”
- “Buy new furniture.”
- “Buy a car.”
- “Get a new apartment.”
Best practices for spending your tax return:
We have a few final tips for spending and splurging your tax return in 2021.
- Be careful of keeping your off-limits tax return in your everyday spending account. Why not move the money into a savings account, build some interest of your own, and protect your savings until you are ready to spend it wisely and have your splurges planned out.
- Remember, your tax return is money that you overpaid to the government. Treat it like income to use wisely (because that’s what it is) instead of a bonus to completely splurge away.
- Beware of your material and temporal spending. As we have said, treating yourself to a nice meal is fine. Just don’t start eating out every meal. Before long, you will have no refund left and an extra 20 pounds on your waist. Avoid the mindless small purchase spending.
- Think ahead with larger purchases. If you do decide to use your return on, say, a new vehicle, be sure to crunch some numbers first. Will you be able to afford the taxes and payments long-term? You won’t want a purchase today to hurt you financially tomorrow.
- Make smart purchases. Say you currently purchase a cup of coffee every morning from the local coffee shop. Why not invest your money into a nice coffee or espresso maker? You will save money in the long run. Then you can still treat yourself to a specialty drink when meeting at the coffee shop with friends.
So how will you spend your tax return in 2021? We hope this list of smart and fun ways to spend your tax return has inspired you and excited you for the tax return coming your way. Remember, the filing deadline for federal taxes has been moved back to May 17th. Be sure to check with your state agency to see what their deadline is for 2021.
