The average tax refund is estimated to be about $3,100. If you are due a refund, you should wait at least three days after e-filing your tax return before checking the status and four weeks after sending in your return by mail. The IRS now has an online tool, “Where’s My Refund?”, which allows you to check the status of your refund.
What should you do with that refund once you get it? Steve Siebold, author of How Rich People Think and a self-made multimillionaire who interviewed some of the world’s wealthiest people, notes that “when you get that refund check in the mail, a left brain–right brain battle begins immediately. The left side of your brain, or the logical side, wants to put the money into savings, invest it, and make it grow or pay off debt, while the right side, or emotional side, of your brain wants to go on vacation.”
While it can be tempting to hit up the mall and blow through your money the second that big check arrives, smart spenders find ways to stretch their refund checks, notes Lynnette Khalfani-Cox, The Money Coach.
Here are five smart ways to make your money go further and enhance your quality of life.
1) Pay off debt. A study from the American Psychological Association showed money is a top cause of stress for Americans. “To help rid yourself of money worries, reduce debt with your tax refund,” says Khalfani-Cox. “Pay off a credit card bill, wipe out a lump sum on loans, or make an extra mortgage payment to help toward becoming debt free.” Focus on the long-term results of financial freedom and abundance that comes with paying off your debt, adds Siebold.
2) Invest in yourself. If you want to spend your refund, invest in your personal growth, education, and career development, suggests Siebold. “Take continuing education classes or professional development seminars. Or attend a business networking event.” Similarly, invest in your health by signing up for a gym, taking fitness classes, or getting a personal trainer. “A healthy body can boost creativity and productivity—and hopefully lower your long-term healthcare costs too,” adds Khalfani-Cox.
3) Take that vacation if you can. Cognitive overload will bring anyone down both personally and professionally, explains Siebold. Avoiding burn-out also is why world-class performers take this time off to slow down, gain a fresh perspective, and rejuvenate.
4) Budget for larger purchases. If you’re thinking about spending your tax refund on a vacation or must-have electronics, be sure to first budget realistically, adds Khalfani-Cox. Use helpful budgeting tools to monitor your monthly spending such as Mint.com, a good online and mobile budgeting software tool.
5) Create a “MeFund.” Put your refund to good use by boosting your savings, suggests Khalfani-Cox. Create a “MeFund” as a way to save more every month—whether from a tax refund check, through smart budgeting, or thrifty money-management decisions, like switching wireless carriers.