It’s that time of year to receive your tax refund! Like me, I bet you’re anxiously awaiting your W2’s so that you can file your taxes and get back a nice chunk of change. I know it’s not the smartest thing to do, but I like that I pay in too much every year, so that I get back a decent amount. I find it very hard to save on my own – hey, I’m working on fixing that – and letting Uncle Sam do it for me has just been easy.

I know, I know…letting the government earn interest on my money for free all year isn’t what I should be doing. But I can’t help it. I’d rather pay in extra through the year rather than run the risk of owing yet another bill in April.  According to Money.com, I discovered that nearly 8 out of 10 people who file receive an average refund of $2,800.

So, my question is “What should I do with my tax refund?”

This year, I’m making it a goal to get my finances in better shape – save more and spend less. Rather than letting this nice chunk of change slip through my hands dollar by dollar, I’m trying to plan things out ahead of time and make a budget. Obviously, I’m not a financial professional. (Go to the Disclaimer.) Please do your own research and use your own judgement before spending any money. But here are some ideas I came up with to make the most of my tax refund:

1. Build an emergency fund. The general rule of thumb is to have enough money saved to cover 3 – 6 months’ worth of expenses. I would also like to add enough to pay both my house and car deductibles, just in case. Even if your tax refund isn’t enough to cover 6 months’ of expenses, something is better than nothing! Set up a separate savings account to put back at least 90% of your refund, then treat yourself to something fun with the remaining 10%.
2. Pay off bills. It seems like paying off bills is a no brainer, but nearly everyone has debt.  The more debt you have, the harder it can be to save, the less fun things you can do, and the more you have to work. We all make mistakes, and sometimes we bite off more than we can chew. Or, maybe the unexpected happens – such as a job loss – and you found yourself in over your head, which causes you to borrow money. Regardless of the reason for the bills, using your tax refund to pay them off is a great use of the money.
3. Buy books. Ok, ok. I realize that may not seem like a good idea, but investing in your education is. Anything you can do to make yourself more marketable and set yourself apart from other employees is a good thing. Maybe you’ve been putting off taking a class or obtaining a new certification due to money. Now is the time to invest in yourself.
4. Start a business. Make your money work for you! If you’ve had a hobby for years that you just need a starter inventory to get your business up and running, research what you would need to launch on a shoestring. Using your tax refund would be a great way to kick off a new side business, and hopefully earn you some cash for years to come.
5. Buy US Treasury Securities. For as little as $100, you can invest in your future. Treasury securities are sold in denominations of $100, and are a great start to retirement, as recommended by Vicki Robin and Joe Dominquez in their best-selling book “Your Money or Your Life.” Depending on the maturity you choose, notes will pay you the interest on the money you invest every 6 months for 2, 3, 5, 7 or 10 years and bonds for 10 years. Shorter maturity dates offer more flexibility with your money, and the long maturity of bonds help lock in great interest rates when they’re high. For more information, check out treasurydirect.gov.

I haven’t decided exactly what I’m going to do with my tax refund yet, but these ideas sure have me thinking. What are your plans?