Smart money moves to make with this year’s tax refund
Expecting a tax refund this year? Here are six strategic ways to score the biggest benefits from those extra bucks.
It’s that time of year — tax refund season. Yes, that time when some of us get money back from our tax returns. What do you do with this extra influx of money? Of course, your first thought may be to spend it all, thinking that it’s “found” money; but wait, there are better choices. Here are six smart ways to use your tax refund to achieve impressive benefits and a fair dose of instant gratification.
1. Start an emergency fund right now. If you don’t have one, this money is a great starting point. The general consensus is that you need at least six months (I say at least nine months) of living expenses saved in case of an emergency or job loss. Using your tax refund to get started or beef up an existing account will allow you to rest easier.
2. Upgrade your home appliances. If you have anything home-related that is giving you problems or is about to, now is the time to fix the problem and give yourself peace of mind. Also, home improvements now will pay you dividends over time, and you will enjoy a more comfortable home in the meantime.
3. Pay down credit card debt. This is a top priority. Paying off high-interest credit cards saves you money down the road and gets that debt off your plate. Think about the money you will save in interest by paying the debt off now instead of making the minimum monthly payment for months or years.
4. Go back to school. If your financial house is in order, how about investing in yourself? Using some of the money and taking weekend or night classes can be a chance to upgrade your professional credentials or check out other career options. You can also attend a work conference or join a professional organization related to your career. This could be a great way to leverage that money into a promotion, raise, or better job down the road.
5. Join a gym or buy a bike. This choice allows you to improve your physical health. When you can, riding a bike can save you money on gas and car repairs while improving physical fitness, and joining a gym will give you an opportunity to take care of your body. Studies have shown that productivity is positively impacted and related to fitness and health. However you do it, an investment in your health can reap big rewards.
6. Open a Roth IRA. If you don’t have an IRA, start one. Studies have shown that Americans don’t have anywhere near the savings they should at retirement. If you are in that number, your tax refund may offer a chance to catch up.
Jennifer Streaks is Senior Personal Finance Reporter and spokesperson at Business Insider and a financial contributor at The Grio. A nationally recognized expert on money and affordable lifestyle living, Jennifer is an established financial columnist who has been featured on CNBC, Forbes, ABC, MSNBC, CBS, and more.
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