3 Things to NEVER Do With Your Tax Refund


It’s tax refund time! Or as I like to think of this season, the government finally giving me my damn money back.

I’m usually not one to judge how people spend their money. As long as you can pay your bills, your money is yours to do whatever you want. However, as a money and small business coach, I can tell you that there are smart things to do with your tax refund, and there are straight up dumb things to do with it.

The "smart" list includes things like pay off debt, start investing, and actually saving your money. All of those money moves will make Cardi B proud because they are ways to bring more money into your life. To build wealth, you need to spend your money on things that generate more money. Assets like stocks, real estate, a small business, and liquid cash savings can all generate more money for you.

The best way to stay broke is to take your cash and waste it on things that bring you nothing in return.

1. Throw Good Money After Bad.

What do I mean by this? Ok, picture this. You’ve got a beater of a car. It looks busted, it guzzles gas, and every year you have to fix something expensive on it.

Continuing to pour money into this car is throwing good money after bad. It’s one thing to have an older car that’s in good shape and requires minimum upkeep. It’s another thing to spend time and money trying to fix something that is a lost cause. If each year you spend upwards of $1,000 on repairs, let alone the cash on routine services like oil changes, and the value of the car isn’t much, you’re losing money. Your money would be better spent saving for a newer car.

Applied to other scenarios, throwing good money after bad would be continuing to shop at places where you know the clothes only last a few washes, or go out of style after a season.

2. Impress Other People

We live in a world of social media and reality tv shows. That means we get intimate looks into people’s lives and their spending habits every day. It’s all too easy to see someone with a new car, or catching yet another flight and think, "when this tax return hits, I’m going to get me some of that."

However, the truth is, we never really know how other people afford things. The money for that flight could have been a gift from their parents. It could have come from a credit card, and now they have debt. Spending your tax return to keep up with others is a lose-lose. You don’t need to justify your spending or your lifestyle to anyone, just like no one has to do the same for you.

If you want to spend your tax return on a flight to Ecuador because visiting Ecuador has always been a dream of yours, buy that ticket. If you’re buying it just so you can use the hashtag #travelislife, and show off how much of a free spirit you are, take a seat.

3. Ignoring Your Problems

I’m not the kind of financial expert that thinks you should give up everything fun to save more money. I’m never going to tell you to eat peanut butter and jelly sandwiches until you pay off your student loan debt.

But if you see your tax return as free money to hide from your everyday financial life, I am going to call you out on it.

Many of us feel anxious about our money, so we ignore it. We tell ourselves we will resolve our money woes once we have more money or continue to push back figuring out a game plan. Meanwhile, all the time we spend ignoring our money can make the problems worse or can mean ignoring opportunities to make things better.

When we remain in financial ignorance, we cede our power to those who understand how the system works. Knowledge is power, and nowhere is that more accurate than with your money. Look at the statistics on wealth in white communities vs. in Latinx communities. It’s in large part because the system is set up for white people, and they know how it works. The system works against Latinx people in part because we don’t fully understand how it works.

Learning about money is an act of revolution in a world that wants you to live in financial ignorance. So use your tax return as a chance to face your economic issues, rather than hide from them.



About the Writer:

Kara Perez discovered her love of finances courtesy of her quarter-life crisis. Broke, underemployed and saddled with student loan debt, she realized that her lack of financial education was crippling her adulthood.

After figuring out how to pay off her $25,302 in loans on a salary of less than $30,000, Kara created Bravely to help other women take control of their financial lives.

Kara’s writing has been featured on LearnVest, Elite Daily, Rockstar Finance, The Financial Diet, Glamour, and other publications.

To learn more about Kara Perez and Bravely please visit her website at www.bravelygo.co.