Your tax refund is more important than you might believe. Some of us are guilt about receiving this chunk of change and blowing it immediately. But, don’t feel bad – it’s tempting to mindlessly spend a large sum of money, and many people go this route. However, if you’re interested in making a long-lasting impression on your financial health with your tax refund, there are ways to achieve just that. Check out a few ways that you can make your tax refund work better for you.
Use your refund to pay off debt.
No one likes to live their lives saddled by debt, yet the average American carries around an average of $36,000 of debt. So, why not do what you can to reduce your debt burden with your tax refund? Use the extra cash to pay down a high-interest credit card – and, in turn, up to your credit score – or funnel the refund toward student loan debt. No matter how you go about it, you can bet that using your refund to lessen your debt will pay off over the long run.
Immediately put your refund in a savings account.
Savings are crucial to financial health, but when it comes to actually stash away cash, this is often easier said than done. Whether you are saving for a home, retirement, or college for your kids, putting your tax return money toward a savings account is a great way to give yourself a bit of financial security. Plus, the longer these funds sit in an interest-earning account, the larger the fund will be in the future.
Use your refund for an expensive necessity.
Have you been putting off an expensive purchase or procedure out of financial necessity? If so, now is the time to knock it off your to-do list. Getting new tires for your car, going to the dentist, or purchasing a new piece of furniture are all great examples of pricey necessities that can be handled when you choose to spend your tax refund.
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