02 Apr Best Ways to Use Your Tax Refund
The average taxpayer receives almost $3,000 from a tax refund a year, a considerable sum of money for most people. While it may be tempting to spend your money on a summer vacation or a pair of shoes, that may not be the best way to make your money work for you. Here are several ways to make the best use of your tax refund.
Pay Down Existing Debts
Whether in credit cards or student loans, putting your tax refund towards existing debts should certainly be on the top of your list. Not only will this strategy save you money with interest payments, it can also pave the road toward financial freedom. A bonus is that making a few more extraneous payments can increase your credit score.
Save and Invest
Another smart use of your windfall of cash is to put it into a savings or investing account. If you don’t have a savings fund now, putting a lump sum of money towards one now will certainly be worth it if a rainy day appears later. Investing the money, such as through your retirement fund or through an investing service, is also a smart financial decision to make and can increase the value of your refund over time.
Nontraditionally, you may ‘invest’ in something you’ve been putting off, such as car repairs, dental work, or maybe a professional wardrobe. Now is the time to get these much-needed investments to your health or career with your surplus of cash.
Donate to Charity
Do you have a cause you are passionate about? Childhood literacy? Animal rights? Perhaps, with Earth Day approaching, recycling and cutting down on carbon emissions? Give back to charitable causes with some of your tax refund and do something good in the world. A bonus is that next year, you might qualify for a tax cut for your refund.
Whatever you choose to do, always make your tax refund work for you. A considerable sum of cash like this, like any windfall payment, needs to be considered wisely for your needs. Sitting down and looking through your expenses, and the needs of your family, with a financial advisor like Bank of the Lowcountry, can help you make the most of your tax refund this year.