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3 Smart Things You Can Do With Your Tax Refund

Feb 25, 2020, 16:09 PM
Hand giving money over tax form

You’ve finished filing your taxes, and come to find out, you’ll be getting a tax refund. However, it’s easy to get swept up in the moment and start spending before it even arrives. But you start making plans, stop and consider what you should do with your tax refund, as well as what you want to do. In fact, try dividing your refund into three buckets: savings, spending and future goals. Here’s how:

Start Your Emergency Fund. You’ve been saying for months that you should start an emergency fund, so here’s your chance. Even a couple of hundred dollars can go a long way (although, it only takes $5 to open a savings account). The goal is to have three to six months of living expenses saved, in the event the worst happens, such as job loss or big car repair bill.

Have a (little) fun. This tip is often overlooked, and some may be shocked we’re recommending this. However, an occasional well-deserved splurge can help you stay motivated in pursuit of your long-term goals, like saving or paying down debt. Know how much you have to spend (we recommend no more than a third) and don’t go over you limit.

Put the rest toward your future goals. Whether it’s buying a home, saving for retirement or paying down debt, don’t forget to take this opportunity to contribute to your financial future. Is your goal to pay off debt? Make a larger lump-sum payment an outstanding loan or debt.

 

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