As tax season is coming to a close, you may find yourself on the receiving end of a nice refund. You may have even dreamt of how you will use it! Keep your head out of the clouds and be wise with your refund with the help of these tips.
Pay down your debts
Credit cards, mortgage, student loans, car payments…you may owe a lot of different places money! Paying down your debts can help you save money over time as you will accrue less interest. Determine which debt has the highest interest rate and put your tax refund toward your next payment. For more tips on how to improve your credit, click here!
Save it for an emergency
Did you ever hear of the adage the more money you have the more you spend? Unfortunately for most people, it is true! Saving money is very important. In fact, it is recommended to have at least 3 months’ salary saved in case of crisis. Yet, only 40 percent of Americans have savings of this size! This type of savings is called a “rainy day fund.” You could be at financial risk if you do not have money saved for an unexpected expense. If 3 months’ salary seems daunting, it’s okay. Every little bit counts, and every dollar you save yields a little more financial security.
Add it to your kids’ college fund
Many people choose to set up accounts to help their children pay for college. The earlier you start, the better, but it is never too late. If you already have one, consider putting your refund toward this account. If you don’t, it could be a great way to start one. Learn more about college savings plans here.
Contribute to your retirement account
Being prepared for retirement is necessary to ready yourself for your senior years when you no longer work. No matter your age, the earlier you start to plan and save toward your retirement, the better. While you may not be able to add your tax refund to your 401(k), there are other options. Individual retirement accounts, or IRAs, allow you to save and invest money for retirement on your own. Learn more about IRAs here.
Keep it for a big purchase
As mentioned previously, reducing your dependence on loans and credit cards can keep your costs down over time. If there is something you know you want to or need to purchase, try to save as much money as you can prior to purchasing the item. Even if you have to pay a portion of the item with credit or loan, you can keep the interest down and may be able to pay off the item sooner by saving for it beforehand.
Invest in yourself
Is there a class, workshop, webinar or certification that could help you to advance your career and possibly earn you more money? If so, it may be in your interest to sign up while you have the funds to pay for it.
Hire a financial planner
Financial planners can help you reach your savings and retirement goals as well as help you achieve financial stability. Learn more about what to look for when choosing a financial planner here.
For Health Advocate Members
If you are a Health Advocate with access to our EAP+Work/Life service, call us! We can direct you to other helpful resources for maintaining financial wellness.