53. A Minimalist's Guide To Spending Your Income Tax Refund
It’s income tax season, friends! And, as you know I’m not a financial expert or a tax accountant but, just like everyone else, I file my taxes every year and usually receive a refund.
My refund amount varies – sometimes it’s a couple hundred bucks and I’ve had a couple thousand as well.
In the past, I’ve done different things with the amount I’ve received. But more often than not I spend it on myself buying clothes, a plane ticket or just spending it willy-nilly on dinners, nights out, etc.
Over the last year I’ve made some big shifts in the way I approach my relationship with money. Most of the things I purchase these days are intentional and serve an overall purchase. I take my time before buying and I have no problem returning something that ultimately didn’t feel good after purchasing.
Getting a large chunk of money like a tax refund can create a lot of sensations and emotions inside of you. All of a sudden you have this large sum of money and magically everything you ever wanted seems crucial and most important.
As a self-proclaimed “minimalist” I’d like to spark a little fire inside you to do things differently this time around. So here are 5 ways you could spend your tax refund with intention.
1. Don’t spend it at all: I know, that’s not very exciting, is it? But before you had this amount of money in your bank account…you were doing just fine. All of those “things” you thought you wanted were either on the back burner or being saved up for anyway. Don’t blow everything you have on things you just “want” and don’t actually “need”.
2. Use it for a fixer-upper project: Is there something around your home that continues to break down and not work properly? Maybe you need a new energy-saving washer & dryer, new windows or an alarm system. These types of purchases will enhance your life in the long run and are good purchases to make if you NEED them.
3. Throw it into your 401k: I don’t know exactly how much you’re getting back but, I think this day & age we all could use a little more in our retirement account. While on one hand it’s great to say “I may never make it to retirement, I need to live my life now!” most people do make it to retirement and wish they had taken their 401k account more seriously. This is your chance.
4. Pay off debt: I almost didn’t include this one as I think it’s a bit of a no-brainer. But I am because there may be that one soul out there that didn’t think of it. If you have consumer debt, credit card, student loan debt – call them up and ask if you can apply an extra amount of money to the actual principle of the loan. Going online and making an extra payment sometimes doesn’t work because oftentimes payments are applied to interest. So this requires you to pick up the phone and actually call but is a great option.
5. Treat yourself: I do have to include this one because I know how often we are put last on our to-do lists. But, can we have a little bit of intention around this one? What can you do today that will provide you long-term effects? Sure, you can go get a massage and a mani-pedi but those high vibes are short lived. How about going to a retreat where you can create friendships & unplug? What about taking a course in something that can become a hobby or future side hustle? Or maybe upgrading your tools, computer, camera, website so that you can be less frustrated when working & creating? These types of treats feel good but also enhance your life in a positive way and for a longer amount of time than a bunch of clothes, shoes or food ever would.
There are many other ideas to spend your tax refund on, this list isn’t it. But ultimately the decision comes down to intention. Think with your head and not your heart – you’ll gain more clarity that way. What do you actually need vs want? If you buy this “thing” how long will the feelings or results last? Is this purchase for instant gratification?
These questions will get you started and point you in the right direction of intentional spending.