If you’re one of the 80% of taxpayers who will be receiving a tax refund this year, opportunities are you’re debating what to do with the money.
While you can probably imagine plenty of places to put your prized refund check today, you might not be thrilled with the choice tomorrow.
Rather than expend all of your fund frivolously, why not use it to boost your bottom line?
Invest that fund in one of the ideas listed below, and you can guarantee your future self with thank you. You may even have some fun along the way.
Here are some of the best ways to put your taxation rebate to good use this year 😛 TAGEND
How To Spend Your Tax Refund
1. Pay Off High Interest Debt2. Build Your Emergency Fund3. Open A High-Yield Savings Account4. Max Out Your Roth IRA5. Start Investing With A Robo-Advisor6. Apply Your Refund To Your Future Tax Bill7. Make A Principal-Only Extra Mortgage Payment8. Invest In Your Home9. Invest In Yourself10. Give It Away11. Have( a bit of) Fun
1. Pay Off High Interest Debt
While it’s certainly not the most exciting option on this list, if you have credit card debt, paying it down( or off) when you get your tax return is one of the best financial moves you can make.
Free yourself from the shackles of high interest charges and kick at least a portion of that indebtednes to the curb. It can also help boost your credit score, opening doorways and securing your financial future.
It’s been said that action breeds trust and courage–taking this first step towards knocking down your debt will help you move in a positive financial direction.
2. Build Your Emergency Fund
Your car broke down; your child got sick; the neighbor children busted your window while playing baseball. Collisions happen all of the time so make sure you’re prepared for them!
You may not be able to plan precisely for every expense that will pop up, but you can expect the unexpected and prepare yourself for the worst.
You’d be amazed at how free you’ll feel once you have the peace of mind of knowing you’re ready for the random strikes that life hurls your way.
3. Open A High-Yield Savings Account
If you are unsure of exactly how to spend your taxation refund or you’d just like to stow it away for safekeeping, an online savings account is the way to go.
Online banksare able to offer the most competitive rates out there because they don’t have branches to support. For that reason, you’ll find far higher interest rates with an online bank than a traditional one.
Whether you use the account to house your emergency money, or simply to establish some solid financial habits by putting fund away in savings, you should absolutely consider online savings.
Our top picking for online saving is CIT Bank, where you can get high interest and a with a low minimum deposit.
4. Max Out Your Roth IRA
The value of a Roth IRA cannot be emphasised enough. A Roth IRA is funded with post-tax dollars, meaning your distributions won’t be taxed as long as you follow the rules. You also won’t be penalized for withdrawals.
Considering the amazing benefits Roth IRAs offer, if you qualify for one you should try your best to max it out every year.
However, even small amounts can do wonders over the long-term, so take that tax rebate check and send over whatever you can!
Our top picking for a Roth IRA is M1 Finance, where you can invest commission free!
5. Start Investing With A Robo-Advisor
If your debts are paid and your emergency fund is already stocked, have some fun with your rebate by investing it with an online platform.
Whether you’re new to the investing game or have some trades under your belt, a robo-advisor can offer you simplified, affordable trading and resources.
Betterment is one of our top pickings, as it offers dozens of customized portfolios and does all the work for you.
Betterment then automates your investments, rebalancing your allocations for you.
6. Apply Your Refund To Your Future Tax Bill
Are you self-employed? A freelance or contract employee? If you’re required to construct calculated quarterly taxation payments, you can apply your rebate directly to those future obligations.
Doing so now will help to alleviate tax-related stress in the future. It will also help to free up future income for other financial goals.
Rather than letting these expenditures catch you off his guard, you can pay for them with your tax refund, alleviating the financial burden and administrative undertaking of running those costs into your budget down the line.
7. Make A Principal-Only Extra Mortgage Payment
If saving thousands of dollars in interest appeals to you, making additional pays to your mortgage, especially those that are principal-only, is the easiest way to do so other than paying off credit card debt.
Check to make sure your mortgage company doesn’t charge a pre-payment penalty. If they don’t, send that check( or build that online pay) today.
Every little bit of extra money you spend paying down the principal assistances, potentially cutting months or even years off the length of your mortgage. Your tax refund is a great place to start expediting your mortgage repayment.
8. Invest In Your Home
Home improvements are a great way to boost your home’s value. Plus, if there’s a project you’ve been wanting to complete but haven’t had the money to do so, finally crossing it off your to-do list will increase your overall satisfaction.
Simple, inexpensive changes such as paint color, faucets, and illumination fixtures can make a world of change. Additionally, if you challenge yourself to DIY these upgrades or repairs, you’ll expand your skill set while saving money.
9. Invest In Yourself
Never underestimate the option to invest in your health, education, or relationships.
From enrolling in foreign speech courses to getting back into shape or rekindling that romantic trigger, with a small investment in yourself, you can literally reap the benefits for years to come.
One of the best long term investments you can stimulate is improving your marketability in the professional world. Whether it’s going back to school, seeking professional development opportunities, or sharpening your abilities, you won’t regret putting fund behind your professional goals.
1 0. Give It Away
One of the most rewarding ways to spend your taxation refund money is to donate it to a cause you’re passionate about.
If you don’t have a particular organization in intellect, a quick bit of research can provide you with tons of legitimate and worthwhile causes to donate to.
You’ll feel great know your fund is making a difference in people’s lives, and as an added bonus, you’re preemptively working on next year’s tax season since your donation could be a deduction a year from now.
1 1. Have( a bit of) Fun
While it’s ideal to take care of the items above on this list in lieu of having fun, it’s not realistic. To avoid burnout or resentment, try allotting a small portion of your tax return to whatever new gadget you’ve been coveting, a nice meal out, or some other purchase that is for pure enjoyment.
Just don’t choose something from our list of the Dumbest Ways to Spend Your Tax Refund. While you shouldn’t invest your whole return into the fun and frivolous, you can wisely set aside some of it for your leisure. In other words, you can treat yourself without going overboard.
You’ll definitely not regret giving yourself a bit of a infringe as long as you’re still moving along well with your other financial goals.
What do you plan to do with your taxation refund this year?
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