With the most active part of tax season coming to an end, at least for my fellow CPAs preparing first drafts of individual tax returns, there is a lot of noise surrounding this tax season and tax returns. The IRS has published an updated list of the most common scams (remember the IRS will never initiate contact or demand payment over the phone), and in addition to that, many federal refunds have been delayed. You may have already received your return, or it might very well be on its way - depending on the state where you file, how complicated your return is, and when you file. On top of all of this noise, tax scams, and delayed refunds, there is also a nearly constant barrage of headlines that can easily give you a headache just thinking about it. Fortunately, I am not going to try to address any of these issues - that would just give both of us headaches and not provide you with any action steps relevant to your financial life. Instead, leveraging my experience as CPA and advocate for financial literacy, several recommendations will be outlined on this very important question. What, exactly, should a budding entrepreneurial millennial do with their tax refund?

1. Pay down debt

Millennials are arguably the most indebted generation in the history of the United States, and this is a serious problem for budding entrepreneurs and small business owners. Debt can be an anchor around the neck of anyone trying to get their personal finances in order, or bootstrap a new business idea either themselves or with partners. Paying down debt, whether you use the snowball method, focus on higher interest rate debt first, or tackle the biggest debt issue first, is not as important as the fact that you are taking action!

  • Remember, every dollar you pay in interest does nothing to reduce the amount you have to pay back -- make sure it isn't working against you.

2. Invest it

I know that not everybody gets a tax refund, but a lot of people do, and here is the really good news. According to the most current data from the IRS, the average tax refund is over $3,000. This is not pocket change, especially for millennials who are just starting out in their careers while also trying to get their financial lives into order. I am not recommending that you quit your job and become a day trader, or invest it all into the latest and hottest technology stock, but there are a few things that you can do today to invest this money in yourself.

  • Max out your IRA -- if your employer matches, that is almost as good as free money.
  • Take some online courses -- invest in yourself and learn some new skills, or better yet, take a MOOC (even Ivy League schools offer some these days). I just finished a certificate in data analytics at Wharton for under $500.
  • Set up that nest egg -- put the money aside for a vacation, new car, down payment on a condo, or whatever your goal is - put this money to work!

3. Build the business

Sure, investing money in a business idea is a risky idea, but there is nothing as risky as doing nothing, or frittering this money away on brunches (I like brunch too, but think long term!). With all of the platforms available for you to build a business, start a YouTube channel, build a website, write an e-book on a topic you are an expert in, or even sell some merchandise, there are few excuses not to do so! Some examples include:

  • Websites can be hosted for under $20 per year.
  • Pick up a tripod for your phone and launch a YouTube channel, which is free to start.
  • Write an e-book or make videos about something you are an expert in - it will only cost you time.
  • For example, I was able to set up various websites, and self-publish three books for under $100 in total -- that's an ROI all businesspeople can live with!

Tax refunds might seem like an opportunity to splurge on a purchase or new iPhone (rose gold, anyone?), and this is perfectly fine. That said, it is also an opportunity to use this money to help develop yourself, your ideas, and your business. The three items listed above are by no means the only ones, but these are ones that I have used with great success in my life. As a CPA, advocate for financial literacy, and millennial seeking to spread awareness of the nearly endless opportunities out there, I hope these suggestions will help you.