It was estimated that about 54% of Americans got a tax refund check last year, and of those people, a good percentage splurged on a nice vacation or other fun non-necessities. However, if you find yourself stressing throughout the year with a tight budget, rather than giving yourself a second Christmas, let Uncle Sam help you use this once a year chance to improve your finances. With these smart things to do below, you will see how your tax refund check can help you rest easy financially once and for all.
If you’re expecting a refund this year and you’re not where you would like to be financially, here are five smart things you can do with that money (or with any lump sum of cash) you receive this year.
- Become Debt Free. Would you like to create more wiggle room in your budget? Although most people aren’t able to become 100% debt free with their tax refund checks, it is a good idea to use some of your refund to pay down debt. Not only will it help reflect positively on your credit, but it can also free up more wiggle room in your regular monthly budget that you can save or spend on other items on your list.
- Build a Nest Egg. Can’t cover a $400 emergency from your checking or savings account? It turns out that nearly 47% of middle class Americans are in the same boat. A good rule of thumb is to have a basic emergency fund of $1,000, then work towards building a fully funded emergency fund of 3 to 6 months of living expenses. Use some of your refund to get a jumpstart on your savings so you’re not caught off guard by unexpected expenses. But don’t get overwhelmed over the numbers. You can do it! Remember, inch by inch and everything’s a cinch.
- Repair Necessities. Need to get some work done on your car? Since we know that life will inevitably hit us with a list of unexpected expenses like a family emergency, an appliance going out, or your car needing repairs, it’s always a good idea to be proactive and repair the things that have gone bad (that we can fix) before they get worse and become a more expensive fix.
- Fund Your Future. Have you thought about the big “R” word yet? It’s never too early (or too late) to start thinking about your own retirement. Even if the only way you can save for the future is through your annual tax refund checks, setting aside something now is always better than not starting at all. Your future self will thank you.
- Invest in Yourself. Living above your means or not where you want to be career-wise? Assuming you’ve already done what you can to reduce your expenses, it’d be wise to use your refund to invest in your career. You’d be surprised how affordable an extra credential or training program might be in your area and the impact it could make to increase your regular income.
For many people, tax season is a once a year chance to improve your financial situation. Take advantage of your opportunity to reach your financial goals during this time of year.
For over 20 years, Always Money Finance has been a regional leader in providing affordable credit solutions to customers across the southeast looking for a convenient and confidential way to meet their needs. Getting a handle on your money takes time, and Always Money understands. If you’re in a jam and need immediate help, any of Always Money’s small personal loan options may be just what you need to get you going in the right direction.
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Related article: Smartest ways to use your tax refund check