Studies have shown that people have started to expect tax refunds as a part of their annual income. But even if your refund is less than you expected, as trends suggest it will be this year, there are still ways to put that money to work. As our refunds start to appear in our mailboxes and bank accounts, here are a few ways you can use that money wisely and maybe even get more out of it.
Plan for the future
Whether you’re adding to your existing savings or creating an emergency fund, this is a great time to add to your nest egg. Or use the money to open a high interest savings account or put up as collateral for a shared or CD secured loan. These cost-effective options can improve your credit score while also helping you earn interest and get more from your money.
Debt pay down
Applying your refund right to an existing debt balance is one of the smartest financial moves at your disposal. Obviously, if you have other bills that must be paid then it would be better used for that. However, if your regular budget is set and the refund is just some “extra” income, it would be a welcome chunk in your debt payoff plan.
If you’re interested in entering the world of investing, this could be good seed money to get you started. Since it’s money that you may not have factored into your daily expenses, your risk will be lower, but your reward could stay the same. Contact a financial adviser you trust to help you determine the right move for you.
Spend it on yourself
Before you write this off as not a “wise” way to use your money, consider the investment potential of you. When you are happy and well, both mentally and physically, you will probably get more out of your time and your efforts. In the long run, splurging a little bit on yourself could pay off.
Feeling philanthropic? If you’re not in any need of the money, or see it as “bonus” funds, consider putting it back into the community to do some good for everyone.
It’s not the size of your refund that will matter in the long run. If you’re putting it toward the right goals, then every dollar will pay off in the end.
Kat’s Money Corner is posted on Dollars & Sense every Tuesday. Kat Hnatyshyn, when not blogging or caring for her little ones, is a manager with CommunityAmerica Credit Union. For more financial chatter, visit http://communityamerica.com.