Four Financially Responsible Suggestions For Your Tax Refund
Few people find the tax season pleasant or enjoyable. However, getting a return on your taxes can go a long way toward improving it.
There are many things on which to spend a tax return and most people have no trouble coming up with ideas for it.
However, it’s rarely wise to run out and spend that money immediately. That windfall needn’t be an opportunity to splurge.
Instead, why not turn it into a buffer between you and the world?
There are many fiscally responsible ways to use that tax return. Money isn’t easy to come by, so here are a few ways to use the extra cash to help you through the tough times to come.
Put it in your savings account
Put your tax return into a savings account and leave it there. Many experts recommend having a cash reservoir to tap into when you’re in trouble.
The specifics vary, but most agree that a thousand dollars should be your minimum for this emergency fund.
Putting your tax return into an emergency fund is the financial equivalent of buckling your seat-belt.
If you do feel the need to keep the extra cash handy in your checking account, consider writing checks as a way of maintaining a record of your spending.
If you want to use it now, consider investing in it.
Remember, investing doesn’t just mean buying stocks. It can also mean investing in yourself by taking classes at the local college.
It can mean buying that new piece of equipment that will take your side business to the next level.
It can mean repairing your house, your car, or otherwise improving your property. Investing that tax return in something that will create yet another return is just good business savvy.
Spend it on your family or your friends
Yes, that money is yours, but you never expected to see it again. Why not share your good fortune with others?
Even loaning it to someone who is hard up, free of interest, is a good use of that money.
Friendship and goodwill are always more valuable than any amount of cash.
Pay down your debt
Carrying an excessive amount of debt can lead to a lot of problems both in the short term and down the road.
High-interest rates can add up very quickly, and it’s very easy to end up in a situation where you need to pay well over the minimum payment just to put a dent in what you owe.
Also, carrying high amounts of debt can reflect poorly on your credit score, which can make it much more difficult if you plan to apply for a loan for a large purchase, such as a house or a car.
If you can afford it, using your tax refund to pay down that debt can go a long way towards getting you out from under it.
Written by Geraldine Oriental