There are a million ways to spend unexpected cash, but you might want to know the BEST ways to put your tax refund to good use.
Here are 10 smart moves that will improve your financial snapshot.
1. PAY OFF DEBT. If you have any credit card debt, car loans, school loans or any other owed money, your tax refund would make the most impact my going towards paying that down first.
2. EMERGENCY FUNDS. Whether it be your short term, which you should have first – at least 1-2K in cash, or your long term (3-6 months living expenses), this is another great idea for boosting your assets.
3. RETIREMENT ACCOUNT. The earlier you start, the less you have to contribute. If you put that $1000 in an IRA and didn’t touch it and didn’t add to it, at a very conservative 8% interest rate, you’d have $5000 in 20 years. Congratulations, time has just earned you $4000.00 without lifting a finger.
4. COLLEGE SAVINGS. Your child may or may not go to college, but better to plan ahead and give yourself some leeway. If you don’t already have a Upromise Account, you should sign up today. It’s a free and painless way to start TODAY to put college money aside. You get money back for stuff you’re already buying.
5. GIVE BACK. Take 10% of that refund and give it away. You won’t miss it. Someone else needs it more than you do.
6. REPLACEMENT CAR FUND. Cars are a money pit, and you will need to fix and/or replace yours sooner than you’d like. Put this away and keep adding to it for your next vehicle.
7. VACATION FUND. Sometimes we just need a break. Set this aside so you don’t go into debt to vacation. Borrowing money is not a good way to relax. Breathe deep and know you’ve got it covered. Then enjoy! Try an all inclusive someplace wonderful – no worries, no need to spend extra on food, you’ll know exactly what you’re spending ahead of time. Priceline always has the BEST prices on all vacation packages!
8. OPEN AN ACCOUNT FOR YOUR CHILDREN. Most banks offer a no-fee savings account option for children. The interest rates are less than 1%, but the act of opening an account with them and discussing the best way to make money work for us instead us of working for it is a great bonding experience.
9. BURIAL PLOT. I hate to end this list with such a downer, but funeral expenses can be exorbitant. It’s best to not grieve over not planning ahead when the time comes, so be prepared when you are well and able to make a wise decision.
10. LEARN SOMETHING NEW Take an Udemy course and broaden your skills and knowledge. Want to learn how to create a blog or make money from home? This is a cheap and easy way to do that.
If you got one, what are you going to do with your tax refund?
Leave a comment and let me know!