Finances – there is something we all have to navigate in adulthood. Take your tax return, for example. Receiving such a large sum of money at once is a great way for many Americans to practice self-control when it comes to spending money. So, if you’ve blown your whole tax return on something that was less than necessary, do not feel guilty. We’ve all been there! All you can do is make smart money moves going forward. Here are three tips on how to spend your tax return and make it 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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