Many of you will have already received the tax return of the declaration and others will be looking forward to receiving it.
In most cases, this return of finance is a relatively important money and in many cases it is not well known what to do with it. Spend it, save it all, invest it?
In today’s article we will see 3 things you should NOT do with this money and 6 things you should do.
What you must not do
- Buy a lot of unnecessary little things: It is very common to receive the money and spend a weekend spending it. Go to the movies, go to lunch or dinner, go shopping and buy items that you neither want nor need. It is one of the fastest and most absurd ways to waste money in a few days.
- Leave it in your checking account: This idea is going in the right direction, but putting the money in your checking account is synonymous with not earning anything and losing purchasing power over the months. Also normally in these cases the money evaporates into unnecessary expenses little by little.
- Loans to family members or friends: I am not very supportive to borrow money from both friends and family, except when the situation is very important. I wrote an article a few months ago about this in Bank Comparison. I think that the problems that this action can cause are very important.
And now let’s see what you should do with that money
What you should do
- Start or supplement an emergency fund: Very few people have an adequate emergency fund. That is, a savings account in a bank that contains the money that can be used for current expenses for a few months in case of crisis, such as job loss.
So it is also your case it is a great idea to dedicate this money to your emergency fund. Hire a savings account with a good interest rate and deposit the money there. Do not touch it until a disaster occurs.
This way the disaster won’t ruin your finances. You just have to take the money and dedicate it to that unforeseen expense.
- Invest in an investment fund: If you have a medium- or long-term objective, invest in an investment fund, specifically in index funds.
Ideal to buy a house, make a very special trip, buy a car or save for retirement.
- Start your own business: You can use this money to invest in starting your own business. This will set the stage for another source of income in the coming months or years.
- Make a home improvement project: Dedicate that money to buy things you really need in your home. A new closet, paint a couple of rooms, buy a new carpet.
This will increase the value of your home
Which is especially important if you decide to sell it in the future.
- Make your living space more energy efficient: Replace all your bulbs with energy saving light bulbs, put on a programmable thermostat, improve the insulation of your windows and doors to avoid heat loss and so on.
Doing all this can mean a significant reduction in your monthly electricity bill, which means that in the long term you have more money in your pocket thanks to this investment.
- Invest in individual actions: Dedicating money to buying a few shares is a good way to start familiarizing yourself with this type of investment without spending a lot of money.
In summary, there are a lot of things you can do with the money from the farm return that will allow you to lay the foundations for a solid financial trajectory.
Don’t let this little big financial help go through your life without more. Letting her go on unnecessary expenses.