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It’s everyone’s favorite time of year again – tax season! After the hard part of getting your documents together and filing your taxes, you may discover that you are one of the lucky ones who will receive a sizable tax return. Although you may be tempted to go out and spend the money right away, consider some of these smart money options for spending your return.

1. Pay Down Your Debt

A tax return is one of the largest lump sums of money you may receive all year. Use it wisely and dedicate a portion (or all of it) to paying down debt, including credit cards and student loans. If you have credit card debt, make a lump sum payment toward the bill. If credit card debt isn’t your problem, but you have a mortgage, consider making an extra principle payment on your mortgage to reduce the length of time you have left to pay off the mortgage. You could even pay off that car loan or personal loan you took from your 401k. All will give you the end result of less debt, more cash flow and peace of mind! Paying down your balances can also have a positive impact on your credit scores (you can check yours for free on Credit.com), so that’s another bonus.

2. Start or Build Up an Emergency Fund

Whether you keep this fund in a savings account or under your mattress, you should try and build an emergency fund with at least six to nine months of living expenses. This money can help if there is a natural disaster, if you have unexpected damage to your home or car (that insurance doesn’t cover) or if you lose your job. Consider your emergency fund a safe haven in times of need and do not touch it unless you have an actual emergency.

3. Invest Your Money

Start or build up a retirement fund or other investment fund: These days, retirement seems unlikely for a lot of people. People are working longer than ever to make up for the fact that living expenses are going up and they didn’t save enough to retire. Prevent that by opening your own retirement account or adding money (on top of your regular contributions) from your tax refund. Depositing as much money as possible can help ensure you a better chance at retirement with more cash flow in the future.

4. Home Improvements

If you’re looking for a good way to invest your tax refund, fixing or updating various aspects of your home could be a great idea. See if upgrading to energy-efficient appliances can save you money on your heating bill. Buy supplies for a DIY project. Regardless of what you decide to do, putting money into home improvements can both increase the value of your property and make your home more cost-effective and comfortable.

5. Improve Yourself

It’s always a good idea to invest in yourself. Have you been looking to get in shape? Sign up for that gym membership you’ve been meaning to get. Want to take a step forward in your career? Put your refund toward your education or a training session for a new skill. Been looking for a little capital to get your side business going? Here’s your chance! As long as you’re not spending it frivolously (be honest, is that new TV really an investment in you?) putting a little money toward your own future can be a huge benefit.

However you decide to spend your refund, it’s important to make sure that you’re addressing your needs before your wants. Sure, using your refund on a little retail therapy might provide you with some momentary satisfaction, but first make sure you couldn’t be getting more out of your money. Take the time this tax season to really assess your financial situation and determine where your windfall will be best put.

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