Reading Time: 2 minutes, 25 secs

4 Ways to Wisely Use Your Tax Refund

4 Ways to Wisely Use Your Tax Refund (1)

Now that tax season is fully underway, you may be thinking about what you want to do with your tax return when it comes in.  For some, it might go right into a savings account.  For others, it might be an opportunity to splurge on different items you’ve had your eye on.  A healthy balance between the two, is looking into some wiser ways you can utilize your refund.  If you’re waiting on your refund to come in, consider some of these great options to put it towards:

Contribute to Your Emergency Fund

You may have one already, and if you don’t, it might be a good time to consider starting one.  An emergency fund is a great tool to have in case you encounter an unfortunate major expense that you wouldn’t regularly have the funding for.  You can contribute to your emergency fund on a regular basis depending on your pay schedule. However, when your tax refund comes in, depending on the amount, you may be able to make a large contribution, and give yourself a better financial cushion in the event of an unexpected expense.

Invest in a Down Payment

You may be in the process of looking for a new home, or even a car.  Both of these purchases are likely to require some sort of down payment, especially if you want your monthly payments reduced as much as possible.  Your tax return is a great way to contribute to a downpayment and significantly lower what your monthly costs or the length of your finance or mortgage term will be.  If you’re buying a home, for example, this lump sum of money will be a great contribution to your down payment or even your closing costs.

Pay Down High-Interest Debt or a Mortgage Payment

Any debt you’ve been carrying for a while is likely racking up interest, and depending on the company or what type of loan it is, the interest rate could be extremely high.  Your tax return would be a great way to pay down some high-interest debt and bring you closer to having it paid off completely. Additionally, you can also consider contributing to your mortgage payment if you’re a homeowner.  However, you should always make sure that your mortgage company isn’t going to charge you a penalty for early or pre-payment.  If you’re certain you won’t get a penalty charge, consider using your tax return to make some additional mortgage payments.

Make a Home Investment

If you’ve been wanting to make some interior or exterior home updates, refund time is a great time to do it.  This extra money may help you make improvements or updates that you might not have been financially ready for before.  In the long run, this will ultimately improve the value of your home while turning it into exactly what you envisioned.

0 Likes