CITATION: “© [Colin Watts] / Unsplash”
Our tax returns are a welcomed gift we receive early in the year; However, it’s easy to waste that hard-earned money on items we don’t necessarily need. Be responsible with your tax return and use it wisely by paying off debt or starting to save for retirement.
Take advantage of this extra money—discover what to do with your tax return.
Start A Savings Account
Your tax refund is the perfect way to start a savings account; having a savings account is a great way to reach your financial goals. Create a budget and plan for your next big investment down the road such as college, a new car, or a house.
Pay Off Your Debt
Tax season offers a great opportunity to reduce or even eliminate debt you may have. Use your tax return to start paying off any debt you may have collected in the last year—especially if you owe student loans.
Start an Emergency Fund
For those who already have a savings account set up, consider using your refund to start an emergency fund. This is money that you set aside for any potential financial disasters. Financial experts say you should have at least six months’ worth of savings stowed away in an easily accessible account.
Make an Investment
Another great way to use your tax return is to invest it. Consider investing in stocks, mutual funds, and bonds. Investing is an easy and efficient way to grow and save your money over the years.
Improve Your Home
Conveniently, tax season comes to an end right as spring cleaning begins—it’s the perfect time to do some home improvement. It’s common for people to use their refund to ensure their air conditioning unit is in working order, re-caulk or replace windows, and perform seasonal care on their decks and patios. Invest this money into things you need now; if they go unchecked, they could end up costing more later on.
Fund Your Retirement
There is never a bad time to start saving for retirement. Use your tax return to invest in a Roth IRA or traditional IRA. In the long run, you will be grateful that you started saving money as soon as possible.
