Most of us dread tax season. Even with sites like TurboTax, Tax Act, and H&R Block, we still have to sit down and fill out complex tax documents. Things get extra complicated when you’re self-employed or own your own business.

But, with taxes comes one exciting thing—tax returns!

While it’s not technically free money, getting a couple thousand dollars (or just a few hundred) feels great.

It’s ridiculously easy to spend that money on frivolous things (last year I spent a chunk of mine on a tattoo, for example), but there are better things you should spend your tax return on (don’t worry, I also put some of my return in savings).

This tax season, be more responsible and use your tax return to do one (or more) of these five things.

1. Apply for a secured credit card

If you’re looking to build credit, getting a secured credit card can help you improve your credit fairly quickly.

A secured card works like a traditional credit card, but you must put down a cash deposit before you can make charges. In most cases, that deposit becomes your credit limit.

Some cards offer a higher limit with a lower down payment if you have somewhat decent credit. The Capital One® Secured Mastercard®, for example, offers a $200 credit line if pay a down payment of $49, $99, or the full $200—it all depends on your credit.

Since you’ll need to pay a down payment for the secured card, set aside your deposit from your return.

This, of course, is one of the most responsible things to do with your sizable return. If you don’t yet have a retirement account, here’s our beginner’s guide to saving for retirement.

Whether you have an employee-sponsored 401(k), an IRA, or a Roth IRA, put some (or all) of your tax return towards your future.

If you have a 401(k), chances are you don’t really know what you’re doing when choosing how to invest your money. Most people simply guess, which is a good way to lose money. But there’s good news: there’s a great young company that can help you invest your retirement plan: Blooom.

Blooom provides online 401k optimization, and automatically makes difficult investing decisions for you.

For more information on how Blooom can work for you, check out our review. Blooom also now has a special promotion to get $15 off your first year of Blooom with code BLMSMART

3. Invest

If investing in your retirement account is a little too boring for you, there are other investment options for you to consider. You can go the traditional route and invest in stocks or mutual funds. Or, you can invest in the following, more unique, options:

Robo-advisors

Investing is complicated and most of us just don’t want to think about it. Luckily, in our technological age, we don’t have to.

Robo-advisors are diversified account investors that use a complex algorithm to best manage your investments. Note that you will need to pay fees for the robo-advisor, but those feels will be substantially lower than fees you’ll pay for a financial advisor. Your tax refund will be more than enough (depending on your income and the size of your portfolio, of course) to cover the fees.

Betterment and Wealthfront are our top picks for robo-advisors, but there are many more to choose from.

Real estate crowdfunding

Real estate crowdfunding is similar to other crowdfunding (think GoFundMe), except they offer investors the opportunity to lend money to other investors looking to purchase real estate.

Crowdfunding as a whole is growing, and there are a few reputable companies that allow you to invest in real estate for just $1,000.

Fundrise, a company started back in 2012, has a minimum investment of $1,000 and offers commercial real estate investments such as apartments and office buildings.

EquityMultiple is similar to Fundrise except it has a $5,000 investment minimum. They’re also backed by a real estate capital firm, so they may just be more secure.

Bitcoin (and other cryptocurrencies)

While we definitely don’t advise that you invest your money in cryptocurrencies, we do want to present you with the information you’ll need in case you decide to take that dangerous route. Bitcoin is still on the rise. With more and more retailers accepting Bitcoin as a legitimate currency, you can now actually use your bitcoins.

Or, you could buy and sell when Bitcoin surges in price—which is what many people d0.

But be warned, there are risks since cryptocurrencies are so volatile.

Investment Apps

There are plenty of apps that invest your spare change. Now you don’t have the excuse that you don’t have enough money to invest.

Stash is an investing app that doesn’t just help you invest, but helps you invest in what you believe in. You can start investing with just 1 cent! There are 3 plans too, where you can spend as little as $1/month for the beginner plan, $3/month for the growth plan, and $9/month for the Stash+ plan.

Stash has a promotion right now: Sign up and add $5 to your investment account and get $5 added to your Stash banking account! 

Acorns is Stash’s biggest competitor. It’s almost identical to Stash—fees and all. They’re less concerned with socially conscious investing, but they do want to invest based on your individual goals.

4. Open a savings account

We all want to impulse spend when we get our returns back, but putting your money in savings until you really need it is obviously a much better idea.

You have a few options when it comes to a savings account. You can open one through a credit union or a larger bank, or you can opt for an online savings account.

There are many options when it comes to online savings accounts—all of which offer a better rate of return than traditional banks.

There’s the Capital One® 360 account, Discover’s Online Savings account, or Ally’s savings account to get you started.

The best part? It’s very easy to save automatically through online banks. That way you can set up a savings plan and have money taken out each month. This makes your savings more untouchable.

There are also plenty of apps that do the same thing. Digit is a good example. All you have to do is link your checking account to Digit’s secure site and Digit will make period withdrawals (don’t worry, they’re small) that don’t coincide with bills.

 5. Pay off some student debt

This is likely your least favorite suggestion since none of us want to think about our student loan debt, but we all have to pay them back (except for the lucky few that get their loans forgiven).

Luckily, there are a lot of plans to choose from when it comes to paying back your loans—even if the lenders don’t always make it easy. If you feel really compelled to put all of your return towards your student loans you could be on the path to repaying your loans within a few years!

For the rest of us, however, using our $1,000 tax return will only pay of a small chunk of our debt. But, that’s still something!

Here’s Money Under 30’s guide to paying off student loan debt to help get you started.

Summary

Getting your tax refund can feel like free money, but it’s not, and it shouldn’t be wasted. Whether you invest or save, make sure you’re doing the responsible thing and not throwing money away on things you just don’t need.

Read more

  • How To File Income Taxes: A Guide For Filing Your 2017 Taxes
  • Understanding The Differences Among Tax Credits, Deductions, And Adjustments