There are plenty of fun purchases you can splurge on with your tax refund, and even more useful ways you can put a tax refund toward your financial health.
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Purchase Life Insurance
If you don't already have a life insurance policy, consider putting your tax refund toward making this purchase.
Diana Angelini, licensed financial advisor and head of Ladder for Advisors, said spending your tax refund on a life insurance policy is an underrated, and useful, splurge. If the worst-case scenario happens, you'll be covered under the policy that best suits your needs.
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Invest in a Startup
Nathan Mueller, financial planner and financial coach at BlackBird Finance, recommends using a tax refund to invest in a startup.
There are a few things you'll need to take note of before you invest. Mueller said you'll want to diversify by investing in multiple companies. The minimums to invest are also low so most people can buy-in. Retail investors may invest in innovative startups and early stage companies with the use of platforms like StartEngine or WeFunder.
Invest Responsibly
Do you ever feel there is a values mismatch in where your money is going, especially when it comes to the investments you own? Kerry Keihn, financial advisor and chief operating officer at Earth Equity Advisors, said investing responsibly is one of the ways you can bring your money more in alignment with your values.
Use your tax refund to switch to green investments, whether you're just getting ready to start investing or already have some investments built up. Keihn said the switch should be a smooth process: look for firms or funds that specifically state they have a fossil fuel free philosophy. This allows you to create a diversified investment portfolio and invest in more sustainable companies.
Support a Cause
Another way you can bring your money in alignment with your values is by supporting a cause that matters to you. Keihn said you may use your tax refund to support an environmental-specific cause or donate to organizations that support women and girls, the latter of which has surprising environmental benefits.
"According to Project Drawdown, two of the top ten most powerful solutions to reversing climate change are educating women and girls, and access to family planning," said Keihn. "These are two critical pieces of the puzzle to combat climate change, and they are important to keep in mind when you are evaluating different causes to support. While some might assume gender equity has purely a social impact, it also powerfully affects the environment and cannot be overlooked as a climate solution."