When you get a tax refund, it’s easy to spend it quickly. This year put some thought into how you can best spend your tax refund. Here’s a list of ways to use your tax refund to help you get ahead on your finances.
Pay down debt
You probably don’t want to see your entire refund go straight towards your credit card bill, but you don’t have to take the all-or-nothing approach. Consider putting 20% of your refund towards paying down high-interest debt you may have. You’ll save on interest and be finished with your debt sooner than planned.
If you’ve been waiting until you have a substantial amount of cash in hand to start a savings account or an emergency fund, a tax refund is the perfect excuse to get started. Use your refund to start a savings account.
As a bonus, set up an automatic transfer to take money out of your checking account each month to help your savings account grow. Even if you can only afford as little as $10, the head-start you’re getting with your refund, along with the small monthly contributions, will add up quickly.
Be forward-thinking and use this opportunity to start investing. Let’s say you receive an annual refund of $2,800 and invest this money at 6% interest. If you continue investing this amount each year, you could find yourself with approximately $250,727 in 30 years’ time. Now that’s making your refund work for you! Take a look at the investment options we offer to see what works best for you.
Invest in yourself
Advance your career and increase your earning power by using your tax refund to pay for a work-related conference, additional training in your field or for learning an entirely new skill. Money invested in yourself is never wasted.
While you don’t want to blow it all, it’s okay to celebrate on one or two major purchases you’ve been eyeing throughout the year. Now’s the time to splurge on a night out at that new restaurant.
Donate to charitable causes
Take a portion of your bonus cash and give back to your community in ways you might not be able to afford throughout the year. Plus, it gives you a head start on potential deductions for next year if you plan to itemize.
However you choose to spend your refund, consider all your options carefully before making your decision and you won’t have any regrets.