My Tax Refund: 5 Money Moves To Do Now!
My tax refund just came in and it’s easy to get excited over the receipt of it. However, it is important to remember that the government is merely returning your money that you so generously loaned them. Not only is this loan interest free, but it is time wasted where that money could have been working for you. If you received a refund this year, it may be worth the effort to revisit your W-4 as well as adjust what you are withholding. It is generally advised that breaking even is the best possible result when it comes to taxes. With that being said, choosing what to do with a refund is equally important. Here are some suggestions of what to do with your refund if you received one.by Valerie Klim
1. Tackle Debt
If there is one thing I know I want to do with my tax refund it’s tackling debt. Paying off debt can be a daunting task. It can be especially daunting when you can only afford to make payments that only slowly chisel away at your debt. Using your refund to tackle your debt is no where near as exciting as using it to fund a vacation but it is indeed the most financially responsible of the two.
2. Build Your Emergency Fund
Americans are not saving nearly enough for emergencies, and often times saving nothing at all. Being prepared for the unexpected not only provides you with peace of mind, but it can save you from financial disaster. It is recommended to have at least three months worth of expenses saved in the event of an unfortunate life event. Some financial experts recommend saving more, but this is largely contingent on your personal circumstances.
3. Invest in Retirement
Saving for retirement often gets pushed to the backburner for more immediate expenses and desires. It is extremely important to invest as much as possible early on in your career so that time can play its part in making your money grow. A lump sum such as a refund is a great way to start accumulating a stash large enough to eventually retire.
4. Refinance Your Home
Refinancing is surprisingly streamlined and can save you money immediately on interest alone. There is no better time than now to take advantage of the all time low mortgage rates. A refund can be a great way to pay the closing costs and fees that inevitably come with refinancing your home.
5. Give to Charity
Sometimes the most return that you can get for a dollar is not mathematically measurable. Giving to a charity of your choice can be more rewarding than any dividend payment could be. Not to mention there are several tax advantages that come with donating. One of my all time favorite Charities is the Bowery Mission.
Not giving in to the sometimes overwhelming urge to treat yourself is often times extremely difficult. Putting off a big ticket purchase for a week is usually all it takes to realize that your money can be better spent elsewhere. Regardless of how my tax refund or yours ends up being used, it is important to use it in a way that will provide the most valuable return.
I know what I am going to do with my tax refund. Do you? Please share your ideas below.