What Will You Do With Your Tax Refund?
My answer to the question “What will you do with your tax refund?” is usually “What refund?”, but for a change I might be getting one this year.
When contemplating what to do with any potential refund I was reminded of a comment on an old post about windfalls. The comment pointed out that there’s no real reason to treat a windfall any differently than you would treat regular income.
I’ve always thought that was an excellent point. After all, your goals don’t change just because your source of income does. (Or do they? Mine don’t, at any rate.)
So why do people often treat windfalls differently? Part of it could be how we grew up. If you got money for holidays or your birthday as a child, you may have been taken shopping right away so that you could spend it. Or it could be advertising (at least as far as tax refunds go). There are plenty of businesses out there with suggestions on how to spend your refund.
I wonder though if most of us just aren’t used to getting unexpected sums of money, so we don’t know what to do with it. (Of course, some people deliberately use tax refunds as a sort of enforced way of saving up for large purchases or treats, so that’s different.)
When it comes down to it though, there are basically four things you can do with money: save it, invest it, spend it (either on items, experiences, or debt), or give it away.
So what will you do with your tax refund, if you’re getting one? (Or what would you do with some other type of windfall?) Is that similar or different from what you normally do with your money?