Tax season is wrapping up, and if you’re expecting a nice refund check to hit your bank account any day, you’ll need a plan for how to use it so you don’t waste it away. If the thought of that extra money coming your way is already burning a hole in your pocket, you may want to think about using it in a way that will be financially beneficial to you instead.
Let your money work for you. What does your current financial situation look like? Can your refund check offer you a little more security? Here are some basic financial priorities that you may want to consider using your refund for.
Pay Off Those High-Interest Loans and Credit Cards
If you’re trying to work yourself out of debt, your tax refund can help you reduce or eliminate your high-interest debt that’s costing you more. Use your refund to pay off any loans or credit cards with a low balance. Or, consolidate high-interest accounts and put your refund towards any transfer or early payoff fees to help eliminate paying more in interest. Take a look at your high-interest student loans, car loans, or credit card debt and determine the best way to pay these down or pay them off completely.
Start An Emergency Fund
If you don’t already have a healthy emergency fund, now is the time to start. If you do have one, but the balance isn’t as high as you’d like, your refund check can give it a healthy boost. If you don’t have an emergency fund, you’re just one unexpected expense away from getting in debt. You should have at least six to eight months’ worth of your salary set aside. Saving that much can take months if you’re only able to set aside a little bit each month, but your refund can help you to quickly build that fund and provide some peace of mind.
Refinance or Make Improvements
If a lower interest rate is available it will help lower your monthly mortgage payment, but refinancing has closing costs and other fees associated with it. Using your refund to refinance your home will save you money each month on your mortgage; money that can be better spent on something else.
If you have a good mortgage rate already, take a look at your house. Does your air conditioning system need to be replaced? Maybe energy-efficient appliances will help you pay less in utility bills. Making improvements around your home can significantly increase its value and make it more comfortable to live in.
Buy Life Insurance
When you’re young, you tend to feel pretty confident that there’s always going to be time to take care of the ones you love. Life insurance is usually overlooked. But if you’re married and you have a family or you’re planning one, a term life policy will offer them protection should the unthinkable happen to you. For a few hundred dollars, your tax refund can make sure your family is protected.
Spend It On Something You Need
Is your car in need of repair? Have you been putting off a visit to the doctor’s office? Let your refund help you get these essentials taken care of.
Why spend all of your refund on things you don’t really need when you can use it to save you money and give you peace of mind?
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