You can tell it is tax time because people are starting to get ultra fabulous on Instagram.  You wonder to yourself, how in the hell are they affording this and that?  Well, it is actually NONE OF YOUR BUSINESS!  Repeat after me…. “What other people do with their money is none of my business!”  What is YOUR business is what you do with YOUR money, especially if you are one of the 31 billion Americans who get a tax refund.  According to the IRS, the 2016 average tax refund was worth $2895.00.  With that knowledge in hand, retailers hire the best of the best marketers to sell you things you don’t need to impress people you don’t know or maybe even like.  They count on you to CONSUME and not to make smart money moves.  It’s time to stop spending like we are RICH and start making money moves like the rich.  Below are 3 money ways to spend your tax refund that some form of your future self will thank you for.

Pay Down Debt

US households with debt carry an average $15,654.00 in credit card debt, $173,995.00 in mortgage debt, $27,669.00 in car loans, and $46,596.00 in student loan debt according to NerdWallet’s 2017 Household Debt Study.  Often it isn’t even the original amount of the loan that keeps us in an indebted state, rather, the interest that accrues that can turn a $60,000.00 student loan into $120,000.00 in less than 10 years.  TRUE STORY!  Regardless of how and why you amassed debt, it is time to pay back what you borrowed. Billionaire businessman and investor, Mark Cuban, advises people to “pay debt off first.  Freedom from debt is worth more than any amount you can earn”. Every extra payment that you make to pay down debt is an extra step earned on the journey to financial freedom.  In fact, depending on the amount of debt you carry, using your tax refund to pay down or pay off what you owe creditors could have a bigger return on investment in the long run.  If I were to get a tax refund, this is exactly what I would do with the money.

Building Your Emergency Fund

Building your emergency fund is ALWAYS a smart investment in your financial security and future peace of mind.  When the unforeseen (operative word here = unforeseen) happens, you won’t have to start at zero to pay it off.  When emergencies pop up, most people reach for credit cards to pay them and then the cycle of debt continues.  When we use credit to pay off emergencies, we are really paying for the emergency itself PLUS interest.  Dave Ramsey agrees, “The cycle of dependence on credit cards has to be broken.  A well-planned budget for anticipated things [think Christmas and car repairs] and an emergency fund for the truly unexpected can end dependence on credit cards”.

Fund Your Roth IRA

Once you have your emergency fund funded for 6 months worth of expenses and you have eliminated your debt (not including mortgage), you would consider using your tax refund to save for retirement.  A Roth IRA is a tax-sheltered retirement account for individuals to save after-tax income for retirement.  Unlike most other money moves that have to be done before December 31st of the previous year, you can continue to make contributions until the tax deadline of April 18th (2018) up to $5,500 for people under 50 years of age.  If you do this, that money will compound in your favor and when you withdraw your contributions and earnings, after age 59 ½, you will get way more money back then the refund you put in it.  Did I mention this money would be both tax-free and penalty free?