Taxes were due this week, April 18th to be exact. According to the IRS, about 80 percent of filers have a refund coming. The average check is around $2,800. That’s a decent chunk of change for most Americans. Many of us see it as a windfall, since it’s money that isn’t worked into our monthly budgets. There are a lot of ways to spend it, but why not use it to buy a little happiness?
I know exactly what you’re thinking. “Money can’t buy happiness.” Your parents probably said that when you were a kid and asked for a raise in your allowance. They probably also worked in the oft misquoted Bible verse, “Money is the root of all evil.” Then they ended their personal finance lecture with, “Money doesn’t grow on trees.”
They were right. About one thing. There is no deciduous forest anywhere in the world where you can rake up greenbacks in the fall. Oh, that there were!
They were wrong about everything else. That Bible verse actually says, “The LOVE of money is the root of all evil.” That one little word makes a big difference in the meaning. Also, possessing and spending money does give a person a feeling of well-being and overall contentment. You can read about the study they did on that, or you can just think back to a time when you were able to purchase something you really wanted and absolutely found enjoyment in owning.
Of course, it’s entirely possible to be rich and miserable. It’s also entirely possible to be poor and happy. Ultimately, happiness is a choice. Much of it comes from taking actions that contribute to feeling content. That includes what you do with your money.
I know there are folks who will tell you the best thing you can do with that refund is save it. Maybe, and if that makes you happy, go for it! Otherwise, you might want to try one of these other seven ways to spend your tax return. It could bring you a little, or a lot, of happiness.
1. Buy outdoor equipment – I can testify to this one, because I’ve done it. One year my husband and I used our tax return to buy a pop-up camper. It was one of the best purchases we’ve ever made. The camper enables up to travel on the cheap with our two boys. We get the added bonus of spending a lot more time together as a family outside. We’ve created a many memories and visited some really awesome places in the three years we’ve had it. Also, we’ve easily saved more in hotel and restaurant meal costs than we paid for the camper.
It doesn’t have to be a camper. Get a boat, a tent, a snowmobile, anything that gets you active outside. Time spent in the great outdoors contributes to greater happiness. There are a lot of studies that say so. But don’t take their word for it. Try it for yourself!
2. Pay off debt – Let’s get the most practical item on the list out of the way. Debt, nobody likes having it. Nobody likes paying it off either. But, if you can use that tax return to pay off a credit card, car loan or any other monthly installment, you’ll be ahead in the long run. Think of all the interest you won’t have to pay. You’ll also be relieved of the burden of that payment, which frees up cash in your monthly budget. Maybe you can treat yourself to a spa visit instead of sending a check to the credit card company.
3. Invest in your own small business – Do you already own your own a small business? Or is it your dream to be the next Joanna Gaines, and open your very own vintage farmhouse boutique? Your tax return can go to work for you, so that you can work for yourself. You could buy equipment and inventory or put down first and last month’s rent on a storefront. Once your business is turning a profit, you’ll make back your tax return and then some. You’ll also rack up a whole bunch of new tax write-offs for next year, since you’ll be self-employed now.
4. Give to charity – If you don’t want to spend your tax return on yourself, consider donating it to charity. Maybe there’s a cause you feel strongly about, but usually lack extra cash to give. Now is your chance. There are a lot of studies about money and spending habits. Several show giving a gift makes you feel even better than getting one.
Do your research to make sure the group you give to is legit. Verify the majority of their proceeds are directly used to support the cause they promote, not to send staff to expensive conferences in the Caribbean. Then you won’t have to feel bad about spending your refund. You’ll know it’s being put to good use. Bonus: since you gave it to a non-profit, you can deduct your gift the next time tax season rolls around.
5. Make home improvements – Americans are big into nesting these days. We like to make our homes into small castles of comfort, and we spend more time than ever at home. Probably thanks to the wonders of binge-watching introduced to us by Netflix. If you’re going to be home all the time, you might as well have it just the way you want it. Use your tax refund to do small DIY remodeling and redecorating products. You’ll increase the value of your home.
6. Travel – We’ve spent many, many tax refunds on trips and never regretted it. Some people might think travel is frivolous. Maybe, if you go to an all-inclusive resort and spend all your time at the swim-up bar, never seeing anything else. If that’s how you like to travel, you might as well check into the Holiday Inn down the road for a week. I’m talking about the kind of travel where you eat and shop where the locals eat and shop. The kind where you get lost on an old dirt road looking for an obscure historical marker and end up learning the region’s entire history from the old man you asked for directions. When you immerse yourself in a new place and culture, even for a few days, you come away changed and enriched for a lifetime.
7. Have an experience – If you’re more of a homebody, you can invest your tax return in an experience close to home. For example, you can buy season tickets to the local symphony or your favorite professional sports team. You could buy into a membership at the trendy gym everyone’s raving out. Charter a fishing boat, go skydiving, take a hot air balloon ride, a cooking class… The possibilities with this one are almost endless. Like travel, experiences enrich us by teaching us new things about ourselves and our community. You might even learn a new skill.
If you’re compelled to save your tax return, that’s fine. If you have a real need you can meet with that money, of course that should be a priority. But, if you tax refund is expendable income, you might as well buy a little happiness with it.