Checking your bank account daily for that income tax refund? We don’t blame you, we are too. But the question is, what is the best way to spend it?
Rather than having those precious dollars being absorbed into your normal spending routine, get the most out of your cash. Here are 5 ways to make the most of your tax refund.
1. Pay Down Debt
Average annual interest rates for credit cards and personal loans aren’t getting any cheaper. Work to pay off that credit card before making other decisions is a smart move.
You can also make an extra home mortgage payment or two. You won’t feel this benefit immediately, but doubling up now can save you months, or even years, of mortgage payments later. Future you will thank you.
2. Fund Your Retirement Account
Speaking of future you, if you haven’t started investing in a retirement account, now is the time. A great use for the extra cash is making a contribution to get started, or to simply get ahead.
3. Open an Emergency Account
Did you know that most Americans don’t have any money set aside for financial emergencies? Any size tax refund is a great start for an emergency account. While experts recommend that it should eventually total between three and six months’ worth of essential living expenses, anything is better than nothing. Half the battle is getting into the habit of saving. Plus, we all know these things happen when you have no back up cash.
4. Pay for Repairs
Take good care of your expensive possessions. You put the initial investment in, but don’t forget to keep the maintenance going to make the most out of your purchase. This can save you a ton stress in the long run. Use the money to repair that leaky roof before you have to replace your couch that got flooded too. Take your car in for that service you’ve avoided, because a busted transmission costs a lot more than the fluid that goes in it.
5. Invest in Yourself
Investing in your emotional, physical, intellectual health, and career growth is a wise use of money. Feeling a bit burned out? Plan a vacation. If you are in a good financial position, then go ahead and treat yourself. Whether it’s paying for a gym membership or a cooking class, you’ll feel effects of this type of investment fast.
Don’t forget, while earning, saving and being smart with your money is key, it’s also something to be enjoyed. And if you are still undecided on what you want to do with your tax return, don’t forget we have our moveUP Financial Wellness team that can help you out, whenever you need it.
Contact our moveUP team