How to Spend Your Tax Return Wisely

If your one of the millions of Americans who will receive a tax return this year, take a few moments before running out to buy that plasma TV to do a little pre-planning so you can spend your tax return wisely.

Difficulty: Moderately Easy

Instructions

1. Prepare your taxes using tax software or hire a tax professional. This helps to prevent errors and maximizes the amount of your return.

2. File your taxes electronically and opt for direct deposit so you can get your tax refund in a matter of days rather than weeks.

3. Review your finances as soon as you determine the amount you will receive in your return. Take a look at how much you owe on credit cards and loans, as well as how much money you have in savings.

4. Divide your tax return up into three categories: debt payment, savings and fun money. Place at least 1/3 of your return into savings and use at least 1/3 for debt payment, but feel free to adjust these amounts to fit your needs.

5. Wait to make any purchases or make large debt payments until after your tax return has been credited to your bank account.

6. Avoid spending beyond the amount you budgeted for fun money as you will only increase your debt.