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Smart Uses for a Tax Refund

March 15, 2018

It’s tax season, which means one of two things: it’s time to pay or cash in. In the event that you do receive money back for your tax return, it can be tempting to let it burn a hole in your pocket. After all, it’s likely cash that you weren’t counting on. Don’t let that get the best of your spending habits! It’s important to prioritize and plan where you allocate these funds. Here are some questions that are worth asking yourself to help you determine where your tax refund would be best spent.

How does your savings look?

Experts say it’s important to have 6-9 months’ worth of living expenses set aside. You never know what unexpected life occurrences will present themselves. Whether it’s unforeseen home expenses, or the unfortunate loss of employment, it’s important to be prepared for any financially strenuous event. Your tax return could provide serve as a cash cushion that you may be very grateful for later.

Do you have any debt?

If you have already established a reliable savings plan, you can face that unwanted debt, high-interest first of course. Pay off any of those payday loans, credit cards, or even any private student loans you may still be avoiding. An extra payment may even be able to go directly to the principle, meaning your dollar will go that much further in your quest to pay off debt.

Have you made any investments this year?

Set yourself up for the future with some investments. Whether it’s investing in a real estate project or a Roth IRA, there are so many ways to invest your money and make it work for you. Learn how Melrose Bank can help your money grow.

Could it be used to boost your karma?

If you have a solid savings plan, have paid off your unwanted debt, and have money working for you, now what? Make a donation to one of your local non-profit organizations, or maybe a national organization that benefits a cause that is near and dear to your heart. Your donation could even qualify to be claimed on your taxes next year, too!

Would you benefit from investing in yourself?

Is there a certain class you have been wanting to take to boost your resume? Go for it! Maybe you’re finally ready to start building funds for the business you plan to start up in the future. Either way, a tax refund may present a great opportunity to take the money and invest in yourself and your future - you deserve it!

There you have it, 5 smart and worthwhile uses for that 2018 tax refund. As always, if you are looking for additional guidance, your local financial institution is there to help and can point you in the direction of effective savings options, investment vehicles, and more. Happy tax season!

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