Upon receiving their tax return money, many individuals make the mistake of using these funds for frivolous purposes such as shopping sprees. While that new home gym or closet full of clothing might be fun to acquire, there are better ways that you can put these funds to use. Here are a few ways in which you can put your tax refund to the best possible use.
Pay Down Debt
One of the best gifts you can give yourself is to reduce or even eliminate the amount of consumer debt you carry. Use your tax refund to fully repay one or more of your consumer debts. Not only will this help ease your budget each month; over time, you’ll also save a significant amount of money in interest charges over time.
When only making minimum payments on a credit card, you could end up paying three to four times more for that item you simply had to have a few months ago. As such, it’s strongly recommended to get these repaid as quickly as possible – and your tax refund can provide the ideal opportunity to do so.
Establish an Emergency Fund
It’s strongly recommended that you have an emergency fund available that includes anywhere between three and six months’ worth of expenses such as rent or mortgage payments, utilities, groceries and transport costs. This will go a long way in helping to alleviate any stress in the event of being unexpectedly laid off or not being able to work due to illness or injury.
These funds can also come in handy if vehicle repairs or emergency home repairs are needed. Using your tax refund to set up an emergency fund will go a long way in providing you with peace of mind in times like these.
Start Saving for Retirement
If you haven’t got a savings plan in place for your retirement, now is the time to get started – regardless of how young you may be. The sooner you start saving for this item of your life, the less you’ll need to set aside each month, as you grow older.
Your tax refund can be used to set up an IRA or a 401(k) savings plan, which will go a long way towards ensuring a financially sound retirement.
Consider Furthering your Career
Another way you can put your tax refund to good use is to invest in training courses that will help further your career over time.
A few options in this regard can include enrolling in a master’s degree program or even to cover the cost of costly tests you may need to write in order to obtain a certification for the work you’re already doing. If you have children though, these funds could even be used to save towards their future educational needs.
When receiving your tax refund, it can be tempting to spend it all at once. However, your budget will thank you over the long term if you choose to save a large portion, while treating yourself to something small instead.Continue reading