It’s always nice to finish up your taxes and learn you’re getting a little back. Unexpected tax refunds can be a nice little boost for your finances. If you use your refund the right way, you can reap the rewards all year long.
Use your tax refund to pay down high interest debt
This one is obvious. If you’re carrying a balance on a high interest credit card, apply your refund to your card balance. This will jump-start your debt pay down plan and save you money on interest. You can also consider transferring any remaining balance to a low interest card to make pay down quicker.
Put your tax refund in savings and leave it there
Is your emergency savings lacking? If so, consider using your tax refund to create a comfortable little cushion in case a big expense pops up. If you have an emergency savings account to fall back on when big expenses come up, you can cut down on your use of credit cards. Plus, think of the peace of mind that comes with knowing you have some cash to fall back on.
Boost your retirement savings with your tax refund
Talk to your financial advisor to see how you can maximize your tax refund to help boost your retirement savings. This move could reap even more rewards come tax time next year. If you’re not actively working on a retirement plan, this is a good time to start. The sooner you start saving, the better position you’ll be in at retirement.
It’s okay to use your tax refund to spoil yourself (a little)
If you’ve been making major strides to becoming more financially fit, you can reward yourself by using a portion of your tax refund for a treat. Consider a nice meal out, a weekend road trip, or a small shopping spree to satiate your spending sweet tooth.