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By now most people that are receiving a tax refund have already gotten it. Now the question is, “What do I do with it.”
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Sure, there are many options when it comes to spending money. You are being rewarded for overpaying your taxes for the year, why not reward yourself. Spending the money frivolously can feel great at the time, but may not work out in the long term.
Below are three ways you can use your tax refund, oh, and don’t worry, there is a way to buy something for yourself.
Increase Savings account/ Emergency funds
It is a great, almost necessary, idea to have a savings account. These are used for several things, but in most cases, are useful in case of emergencies. These include someone losing a job, an injury, and even an unforeseen issue with your home or car.
A good rule of thumb is to have 3 months’ worth of pay in your savings account. Having your money in a good, interest savings account will help your money grow. Your local accountant will help you find the perfect bank for you to stash away your refund.
Pay down debt
According to the IRS, the average refund in 2016 was $3,120. This could go a long way in paying down credit cards, paying off a car, or even making extra payments on student loans or your house.
Paying your debt down can give you some extra breathing room in case things get tight throughout the year. Plus, it also feels great to make a big payment and relieve some of the burdens of debt.
Splurge
So, you have a decent sized emergency fund, and your debt is at a manageable level. Now what do you do with your refund? The answer is simple. Use it to do something you want. Go on vacation, buy something new for you or your home, or put a down-payment on a new car.
Getting a large refund can be a nice surprise, a big sum of money you may not be planning for. Take the opportunity to splurge!
As you have read in our previous blog, it really is not the best situation for you if you receive a large refund. If you are one of the million Americans who are very nice and loan the government money, when you get your refund check, you should consider padding your savings account, paying down debt, or splurge on something for you and your family.
If you need assistance in deciding what to do, reach out to your personal accountant. They will give you some ideas, give you tips on where to invest, and get you ready for next year’s taxes.[/vc_column_text][/vc_column][/vc_row]