It’s tax time! During this time of year, some can expect a bill from the IRS and for others it can be a boost in cash to jumpstart their savings and financial goals for the new year. If you are receiving a refund from the IRS, don’t look at it as a gift, it is actually a refund of the excess money that you paid to the IRS throughout the year.
Here are five ways you can use your refund wisely and ensure it moves you closer to accomplishing your financial goals.
Pay Down Debt. Paying down your debt with your tax refund can help to relieve tons of financial stress. High interest credit cards can really eat into your monthly cash flow, so paying down this debt can put more money in your pocket each month. You can also apply your refund to your mortgage which can reduce the time it takes to pay off your mortgage and save you money on interest.
Boost Your Emergency Fund. Having funds readily accessible in the event of an emergency can be very beneficial. Applying your tax refund to your emergency fund is easy and instantly fulfilling. Make sure that these funds are placed in a high interest savings account.
Travel. Often people don’t remember what they did with their tax return the previous year. However, if you use your refund to plan a relaxing trip that will allow you to escape the hustle and bustle of life, you will create memories that will last a lifetime!
Contribute to a Retirement Account. Now that you have extra cash, saving for retirement may seem more doable. You can do this by increasing your 401(k) contributions at work or opening a IRA or Roth IRA to save additional money for retirement.
Invest In Yourself. Investing in yourself is always fun. This could consist of getting a massage for yourself, taking that class that you have been thinking about or even hiring a personal trainer or life coach that can help guide you in your professional or life goals.
For many this is the one time of year, that they will receive a large cash infusion, so it is very important to make the most of your tax refund.