You’ve just clicked the submit button and see you will be receiving a tax refund! Now, the big question is, what will you do with the money you’ll be getting? Pay off debt? Make some home improvements? Create an emergency savings? The possibilities are endless, especially because your refund may be money you weren’t expecting.
Pay off outstanding debt
Using your tax refund to pay down loan balances or high interest credit cards can help in multiple ways. Paying the balances down can save you money by cutting down on interest costs and may even reduce your future monthly payments. As a result, you add more money in your monthly budget that can be saved or used for other needs. Also, paying down loan balances and credit cards could have a positive impact on your credit score, allowing you to receive lower interest rates or costs on other items in the future.
Create an emergency savings
Tax refunds are a great way to start your emergency savings. Emergency savings help to pay for large, unexpected expenses like car repairs, home repairs, or unforeseen medical bills. It can be helpful to create a sub saver to hold your emergency savings so it’s out of mind and not as easy to spend as money in your checking account. Having an emergency fund can also help you stay away from using credit cards or loans to pay for these unexpected expenses.
Purchase any big-ticket needs
Lastly, using your tax refund for big ticket purchases can help you get ahead. Do you have any car repairs you have been putting off or do you need new tires or breaks? Are there any home improvements you’ve wanted to make? Utilizing your tax refund for these kinds of expenses are a great way to invest in yourself by making sure you have reliable transportation or adding value to your home.
Investing in yourself with any of the suggestions above can help improve your overall wellbeing. Make of the most of your tax refund and don’t let it go to waste, leaving you wishing you had spent it more wisely.