Tax season is finally over and we can all take a deep sigh of relief. But your duties aren’t quite over; you still have to determine what to do with your tax refund if you have one coming your way. While a money refund may feel like a bonus, you don’t want to waste it or treat it like extra money. Come up with a plan of how to save and utilize your refund so that you’re sure you get the most out of it.
Save and Invest
Of course, the best thing you can do with your tax refund is to put it into a savings account or invest it. Try to save as much of the money you’re getting back as you can. If you don’t already have an established emergency savings, use your chance to build one up. Using a free banking app like Simple or Qapital makes it easy to start saving up a financial reserve. You should have at least three months of your expenses in your account, so use a chunk of the money that way.
You could also increase your contribution percentage for your retirement savings account or open up an IRA. Using a platform like M1Finance or AHPFund will make it easy to save and grow your retirement savings.
Pay Off Debt
Another great way to use your refund is to pay off any debt you have. Having more money than you’re used to is a great opportunity to make an extra payment on your mortgage. Pay off any other high-interest debt you have, such as your credit cards, car loans, and student loans. Any way that you can pay off debt more quickly than you expected is a win. Consider consolidating your debt, refinancing your college debt to save money, or taking out a personal loan to pay off your credit cards to alleviate some of the debt you’ve acquired.
While you don’t want to blow your entire refund on a meaningless purchase, that doesn’t mean you can’t use some of the money to treat yourself a little. Use a small amount of your tax refund to book a vacation, buy something you’ve had your eye on, or go out to a nice dinner. If you spend a little bit on yourself, you won’t feel as reluctant to use the rest of your refund more wisely.
And of course, if you’re interested in earning more cash before next year’s refund, be sure to enter our basic income giveaway for your chance to win $500/month for two years.