Making Financially Smart Decisions

This time of year, a lot of people are hitting the temporary jackpot...W-2's have dropped and tax refunds are being deposited. If you are fortunate enough to get a refund, you have a little (or a lot) of extra change in your pocket. The question is what to do with this money? The first option is usually ball out until you fall out. New shoes and clothes, new hair, eating at all the fancy restaurants, nice trips out of town. Blowing through all of it and have nothing to show for it by the end of the month is not the best idea. There is nothing wrong with treating yourself to a little something here and there. But here are some beneficial ways to make your tax refund check work for you.

1. Invest in yourself

Are you working a dead end job you hate? Are you tired of living paycheck to paycheck and borrowing money just to make it through the month? Use your refund and increase your skill set. Take a couple of continuing education classes. Enroll in a certificate or degree program at your local community college. Increasing your marketable skills will increase your job opportunities which will increase your income in the long run.

2. Pay off your debts

If you are getting a enough money back from your tax refund, another option can be paying off or down any debts you have hanging over your head. Are you paying debts that have interest rates attached to them? The interest rates are making the company you are paying richer and you poorer, Give them a call and see what the pay off amount is. Usually the pay off amount is way less than what you would pay if you continue paying in installments. If you can't pay off the entire amount, at least put a good chunk towards so that you can pay them off faster. If you are paying month to month for your car insurance, call them to see how much it would be to pay it for 6 months or for the year. Most insurance companies give you a discount for paying it all at one time versus in month to month installments. 

3. Save your money

There is nothing wrong with spending a few dollars on yourself, You work hard and you deserve to have something nice for yourself. But what if something happens in the next 3 months after your tax refund money is long gone? You need major car repairs or emergency home repairs or medical expenses. Where will the money come from? Put some of your tax refund money (half would be perfect) in a savings account. Don't touch the money unless you absolutely have to. One trick for saving I learned is to open an account at another bank. The checkbook and debit card that is associated with that account stays in a safe place out of my purse so that I am not tempted to use it. You can also look into opening CD's (certificate of deposits) at your local bank. That way your money will make money for you while just sitting. You can roll your CD over year to year and when you want to use if for buying a home or sending you kids off to college, you have a nice little nest egg to use.

As black women, we have to be smart about using our money. When I was younger, I blew through some money. And as I look back, I can see where I could have made better investments. As I have matured, I don't mind passing on the tricks that I have learned over the years to make my money work better for me.