I know that some of you who are reading this article expect tax refunds either as a check or a direct deposit. I hope I can give you some good tips for using your tax refund better.
A tax refund check can make a massive difference in helping you achieve your financial goals and improve your finances. Let’s talk about my six tips/suggestions to help you spend your tax refund check wisely. I know some of you don’t like telling anybody what to do with your money. Remember, these are just tips.
BUT
If you want to go out and blow your money on a pink giraffe, then so be it do your thing.
In This Article:
1. Pay Off High-interest debt
Use your tax refund check to pay off your high-interest debt. Using your check to pay off your debt can accelerate how quickly you’re able to pay off your debt. It can take months off of your debt repayment plan.
Wouldn’t that be great if you could speed up the time in which you’re able to pay off your debt? That would be awesome.
When people get these refund checks, they’re telling themselves I worked so hard last year I deserve an expensive vacation. I want to buy that handbag or get that dress.
However, you want to think about the big picture of your finances than spending that money on that vacation.
That dress will not get you closer to your debt freedom. I recommend you use some of that money to pay off your debt and get closer to debt freedom.
Think about it this way.
Once you pay off your high-interest debt and are debt-free, you will free up money to put towards the things you want to do, like a vacation. The shopping spree will also be guilt-free.
2. bulk up savings
You can use your tax refund to bulk up your emergency savings, which is extremely important.
The importance of having these emergency savings in place is to weather the storm so that if an unplanned situation or circumstance comes up, it doesn’t completely derail your financial goals because you have money to take care of it.
You won’t have to go out and get more debts to pay for whatever underlying circumstance. So, for instance, you lose your job and have a previous medical expense, or your car breaks down.
These are all situations where you’ll need money to take care of to help you get by. The last thing you want to do is set yourself back naturally by leveraging debt to take care of that situation.
If you have an emergency fund, you can use your saved money to take care of the situation without throwing off your financial goals. Using your tax refund to bulk up your emergency fund is an excellent idea.
3. invest in the stock market
The next tip, which is the obvious tip here, is to invest in the stock market.
If you have been considering investing in the stock market, your tax refund check can help you get started.
You can open an account at a major brokerage firm such as TD Ameritrade.
Start investing in things like index funds or ETFs it helps you build long-term growth outside of your retirement plan.
It’s essential that before you get into investing, you spend some time researching to make sure you have a basic understanding of what you’re putting money into. Getting started with investing is a great way to use your refund check.
4. catch up on retirement savings
The next tip on our list for your refund check is to catch up on your retirement savings.
If you have not quite maxed out your retirement savings for the year, you can take that money and put it in a ROTH IRA. Or towards your company’s 401k retirement savings. Your future self will be proud of you.
5. finance a goal
Another recommendation is to put that refund check towards a short-term or a mid-term goal.
Suppose you’ve been thinking about starting a business, thinking about saving for a down payment on a house, or thinking of saving up to buy a car.
Then your refund check may help you accelerate your short-term or mid-term financial goals.
6. improve your personal development
Lastly, you may want to invest in your personal development and give back to others, so no knowledge is lost. I am a firm believer that you should always keep learning.
You always want to keep improving yourself the day you stop learning, in my opinion, is the day you stop living, so invest in your personal development. It is a worthwhile investment. It will be wise to invest in something to help you improve your skillset to get a better-paying job.
You can invest in something to help you learn about starting a business. You can invest in helping you improve your finances. There are many things you can do to invest in your personal development. Even investing in a few books/audiobooks on topics you’re interested in can help you improve your personal development.
Conclusion
Bonus tip, if you have enough bread saved up and make good money, you could give back to others through charity.
You can give to a worthwhile cause that you’re highly passionate about. There is so much reward in giving back to others and helping other people.
So I hope you all have enjoyed reading this article, and I hope my tips and suggestions help you with what to do with your tax refund.
The last thing you want is to have that money slip through your fingers and not be accounted for.
You don’t want that; you want to put the money you work hard for towards something that’ll be worthwhile. I hope you all have enjoyed reading this article, and if you enjoy finance-related content, please subscribe.
If you want to add to this list or feel a few tips should not be on this list, comment below and let me know.