Receiving your tax return may seem like “free” money to splurge on new things, but it can also be seen as an opportunity to make a smart financial move. Before you buy a new jet ski or a trip to the Bahamas, take a second to look at the ways you may make your life a little easier this year by using your tax return to improve your financial future. There are many different ways you may decide to use your tax return to start securing your financial future. In this blog we will talk about a few smart things to consider doing with your tax refund.
Build a financial reserve. Save money for a rainy day to use in case of an emergency. Things like unforeseen medical bills or unemployment can quickly ruin your finances. Building a safety net of extra cash can lighten the blow when an unexpected financial crisis occurs. Putting just $1,000 into a rainy day fund can be a cushion for your finances, should something happen.
Invest in your home. Making improvements that increase the value of your home can be a great way to spend your tax refund. DIY projects that boost your home’s market appeal can be a rewarding endeavor. Upgrades such as new light fixtures, faucets, or a new coat of paint can give your home a fresh look for not a lot of money. You may have broken appliances or projects you’ve wanted to complete, but haven’t had the funds to do so. Using your tax return for this purpose may be a great way to get it done!
Invest in yourself. Take a class to develop a skill that will further your career. Spend your tax refund on continuing education courses, a weekend conference or online class. Having an extra marketable skill can give an extra boost to your resume. Another option is to take a class in a skill you’ve always wanted to learn such as painting, computer coding or learning a new language.
Add to your retirement fund. There is no time like the present to begin planning for your twilight years. If you have a Roth IRA or other retirement fund, it’s a good idea to contribute as much as possible. Contributing all or part of your tax return can help you plan for the not-too-distant future. Even small amounts can make a lot of difference over time, so send over as much as you can whenever possible.
Pay off high interest debt. If you have debt, one of the best financial moves you can make is to pay down as much as you can, starting with your highest cost debts first. In the long run, this will help you save money on interest and penalties associated with high interest debts. Getting rid of at least a portion of your debt can help shave some time off of the payoff date of your loans, saving you additional interest payments.
Using your tax return to make smart financial decisions can be gratifying. Whatever way you decide to spend or save it, it’s better to use it in a way that will last. Making an investment in your financial future is one of the best ways to do just that.