It’s tax season and many of you will be receiving a refund (if you haven’t already). While we can’t give tax advice, we can help you get the most mileage out of your refund.
While it may sound like a lot of fun, going on a big spending spree is not the best thing to do. There’s plenty of other ways that people can put potential returns to work. The first one that we would advise is, if you don’t already have something in place, begin creating an emergency fund. You should really have three to six months’ living expenses set aside for those unexpected items that come up.
Pay Off Debt
Another good use of your money is to pay off debt if you have it. A lot of people carry some sort of credit card balance, and if you actually looked at the numbers, you’re probably paying somewhere between 18-25%. Even if you don’t have an emergency fund, putting that money in, earning less than 1%, is probably not the best use, so you should really pay down some of that high interest debt first.
Save for the Future
It’s always good to put some money away for your retirement, and there’s a lot of ways to do so. You could put money into funding a traditional IRA or a Roth IRA. You could also find non-qualified investments. And if you go with an IRA, that becomes a deduction for next year’s taxes.
Invest in Yourself
One of the things that sometimes people overlook is investing in yourself. If you’ve been wanting to go back to school or you’ve been wanting to get a secondary degree, your tax refund is a good way to invest in that. You could also begin pre-paying your mortgage or put it toward seed money to begin a business.
Home improvements are always a great way to go. With limited supply of homes on the market and low interest rates,
now may be a good time for you to upgrade where you’re at. Energy efficient home improvements can also benefit you on next year’s return.
While it’s not one that people like to talk about, life insurance helps support those that are left behind upon your passing.
If you don’t already have life insurance, your tax refund can help you begin building up some life insurance for yourself.