Spare cash to a freelancer is nothing but a luxury. As you wait for your tax refund check to arrive, think about how you can spend it mindfully. Here are some ideas on how you can use that extra money to advance financially.
1. Don’t be negative.
If you have any credit card debt or loans you need to pay off, using your tax refund to clear those debts will not only help better your financial state, but add relief to the stressful mental state that comes from being in debt. The longer it takes to pay off a debt, the more interest can accrue. The average American forks over $279,000 in their lifetime in interest alone. Be smart and lower your debt so that you pay back less in the future.
2. Invest in self-improvement.
Need to redo your website? Been waiting to buy a new software program? Are you dying to take a course to learn new skills? Use your tax refund to revamp your business and give your freelance services a makeover. The best part about this type of expense is that it’s also tax deductible! Check out the IRS’ official guidelines for deductions here.
3. Pay your future self.
Contributing to a qualified retirement plan (which provides a nice tax deduction in and of itself) is one of the best ways to make your money work for you. As freelancers, it’s up to us to guarantee a nest egg for ourselves when we are no longer working. We recommend SEP accounts for freelancers to save for their retirement.
4. Make it personal.
We all have ‘that thing we want’ that we can’t currently afford. Maybe it’s a vacation, a new couch for your apartment, or an anniversary gift you want to buy for someone special. Whatever the big spend is you have in mind, name a savings account after your goal (Ex: Hawaii vacation) and deposit your tax return into that account. Doing this will get you one step closer to achieving your goal.