Not everyone receives a tax refund, but if you are one of the lucky ones who does, you should plan to use it wisely. With a few smart moves, you can really make the most of your tax refund and set yourself up for success in the coming months.
Consider these five smart ways to use your tax refund:
- Pay off some debt. Whether you have credit card debt hanging over your head, or maybe medical bills that need to be paid, it’s a great idea to use your tax return to get those debts paid off. If you pay off your debts early, it will free up money you would’ve had to use later for monthly payments and it may even help your credit score! A Centra Loan Check Up (which is completely free) could make your monthly payments even lower.
- Put money into an IRA or 401K. It’s never too early to start planning for retirement, or your child’s college tuition. By putting money into an IRA or 401K early, your money will have time to grow and you’ll be more prepared for the future. You can make an appointment with Centra Financial Services to get helpful advice on how to plan for life’s big events that could cost big money.
- Rebuild an emergency fund. Emergencies happen. They just do. You should have an emergency fund of at least 3-months of expenses so you don’t have to go into debt if an unplanned expense pops up. Saving for an emergency fund may not be the most fun way to use your money, but it’s important!
- Invest in your home. Upgrading a TV or buying a hot tub may not be the wisest investments in your home but investing in something like a kitchen, or deck, could really pay off when it’s time to sell. Consult a realtor for home improvements you could do that could increase the value of your home.
- Pre-pay a vacation. This tip is placed at the very end for a reason – you should only do this if you’ve already accomplished some of the other tasks on this list. If you’ve paid off all your debts, put money into a 401K, built a solid emergency fund and your home is in good shape, then you could consider using your tax refund to pay for a vacation.
You know what they say, “failing to plan is planning to fail”. Plan to use your tax refund wisely and you’ll be on your way to financial success!