Getting a tax refund this year? Here are 9 things you can do with it
According to the IRS, the average tax refund in the United States in 2016 was $3,050.
Depending on your unique financial goals, that money could be put towards debt reduction, college savings, or growing your retirement fund. Better Money Habits provides nine ideas of what you could do with your tax refund this year.
If you intend to save all or at least $50 of your tax refund, consider participating in SaveYourRefund! With $30,000 in prizes and 102 chances to win, SaveYourRefund provides big incentives to save. See the rules and learn how to win here.
Pay down debt
1. Get ahead of loan payments
Prioritizing high-interest debt can help reduce how much you’ll end up paying overall by decreasing or eliminating the interest that would otherwise accrue. In addition to an “avalanche” debt reduction plan, there is also the “snowball” debt reduction method. Check them out here.
Plan for your future
2. Prepare for the unexpected
Nearly six in 10 Americans don’t have enough savings to cover a $500 or $1,000 unplanned expense. While experts recommend keeping three-nine months of take-home income in an emergency fund, even $500 can be helpful in the case of unexpected health care, housing, or auto expenses. Learn more about saving for emergencies here.
3. Contribute to your retirement savings
Consider setting aside some or all of your tax refund in a savings account or individual retirement account (or IRA) for anticipated retirement expenses. Learn more about saving for retirement here.
4. Grow college savings
The sooner you start to save for education, the less debt you’re likely to have to take on when the tuition bill arrives. Check out these tips on other ways to save for college expenses.
5. Build an investment portfolio
If you’re already investing or looking to get started, you could use a portion of your tax refund to contribute to or start an investment portfolio. While investments can be a more reliable savings medium over the long-run, it does involve risk. Check out these resources to educate yourself on the components of investing.
6. Remodel your home
You might be able to increase the value of your home, and therefore your net worth, by using your tax refund to pay for upgrades or repairs. Consider installing energy-efficient features to save both energy on money on your monthly utility bills.
For energy- and money-saving tips that don’t require home upgrades, read this.
7. Donate to charity
Pay it forward by donating a portion of your tax refund to a philanthropic cause. If you decide to use your tax refund for something else, remember that time can be just as valuable as money! You can always volunteer yourself instead of cutting a check.
8. Invest in your career
If you’re looking for the next step in your professional life, consider using your tax refund for professional training or continuing education classes. Investing in yourself and your career can help increase your long-run financial stability.
9. Take a vacation
If all of your financial obligations are taken care of, treat yourself to a vacation to help you relax and recharge for this upcoming year. Learn how technology and pre-planning can help you cut vacation costs.
Let Military Saves help you make the most of your tax refund. It all starts when you make a commitment to yourself to save. Military Saves will keep you motivated with information, advice, tips, and reminders to help you reach your goal. Think of us as your own personal support system.
Planning on getting a tax refund this year? Check out these 9 ideas of what to do with it >> http://bit.ly/2B7yIOI #BetterMoneyHabits
- Category: Blog
- Published: 16 January 2018