You may not look forward to doing your taxes, but you probably look forward to getting your tax refund. But before you start spending your refund on impulse buys, consider putting your refund to good use and ensuring your financial stability for the future. Here are seven smart things to do with your tax refund this year.
- Invest in Yourself
Use your tax refund to learn a new skill that would help you get a raise at work, such as learning basic coding, earning a certification, or going back to school.
- Open an Investment Account
If you don’t already have any investment accounts, or you need to diversify your portfolio, you can open accounts that will help you prepare for your future retirement or any other major life change, like a new home or a baby. We have financial advisors you can meet with at no cost or obligation to help you decide if stocks & bonds, mutual funds, or something else would be best for your needs!
- Make Extra Mortgage Payment
Making an extra payment on your mortgage can save you money in the long run. Since most of your mortgage payments go towards paying interest, making an extra payment that goes towards your principal amount means you will owe less in the future.
- Add to Your Emergency Fund
Most Americans don not have enough money saved up for an emergency or unexpected cost, like a job loss or a flooded basement. It is recommended to have enough money in your emergency fund to cover the cost of three months of living. Putting your tax return to use here can give you peace of mind!
- Get Out of Debt
If you have credit card debt or any other debts with a high interest rate, use your refund to pay off some, or all, of that debt. You will save yourself hundreds or even thousands of dollars in interest!
- Open a Retirement Account
One in three Americans doesn’t have anything saved for retirement. It’s best to start saving for retirement as soon as you start working full-time, but it’s never too late to start! Opening an IRA and making automatic payments has tax benefits and is part of a healthy retirement fund.
- Put it Toward Your Next Big Purchase
If there’s something looming in your future, set the money aside now so you don’t dip into your emergency fund to make it happen. Your tax refund could go toward a new car, paying for a wedding, or your child’s college tuition.
While none of these may seem as fun as a vacation or new piece of expensive technology, you will be thanking yourself in the long run for making good financial choices and saving your future-self money!
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