The IRS tax filing deadline is this week, and the average refund so far has been about $3,500. The question is: what should you do with that refund?
The truth is, a tax refund can be a lifesaver for some, but can cause more trouble for others. When you get that big refund check in the mail, a left brain-right brain battle begins immediately. The left side of your brain, or the logical side, wants to put the money into savings, invest it and make it grow or pay off debt, while the right side of your brain, or the emotional side, wants to go on vacation or remodel the kitchen.
So what's the answer? It depends on your specific situation, but there are some things to keep in mind. If you don't have any debt and don't need the extra money, by all means enjoy yourself. If you're struggling to make ends meet, be logical and put the money to good use.
Focus on the bigger picture
Focus on the long-term results of financial freedom and abundance that comes with paying off your credit cards, student loans and any other debt. Most people with credit card debt don't understand that with interest rates at 20 percent or more, they'll be paying off their credit cards forever. That extra $3,500 can really put a dent in your overall balance.
Don't get caught up in the moment
When you open up that envelope and see that big refund check, put it down and walk away. If you act on impulse you're going to get into trouble. Write up a list of the pros and cons of spending the money vs. investing it or paying off debt. The key is to not go out and go on a spending spree right away. Think long and hard about what you are going to do.
Invest in yourself
If you want to spend your refund, invest wisely in yourself by committing to never ending personal growth and development. Get some business and self-improvement books; take some professional development seminars and look into coaching/mentoring programs. The goal is to use the money to improve your skills.
Another wise investment is to use that refund to get fit and healthy by buying exercise equipment or a gym membership. The reason: taking control of your weight and overall health is the fastest way to ascend to world-class success in all areas of your life. Not only will you feel better, but that confidence will carry over into everything you do. Your level of success in your career, relationships and everything else will drastically improve.
A vacation might be a good idea
Take that vacation if you can. The reason: the most successful people know the enemy of creativity and clarity is excessive cognition. Cognitive overload will bring anyone down both personally and professionally, and it's why world-class performers take this time off to slow their thought process down, and elevate their consciousness to gain a fresh perspective.
Start a business
Why not become your own boss? Use your tax refund to start a business. No one likes to pay taxes, but wouldn't it be better to be so successful and rich that you have to pay tax rather than receiving a mere $3,000 refund? Use your talents and passions and solve a problem that people are willing to pay for.
When it comes to your tax refund this year, the key is to put your emotions on the shelf and let reason be your guide. If you're going to spend the money, the key is to make sure there is some benefit or ROI so you're not just throwing that money away.