13 Smart Uses For Your Tax Refund
After filing their tax return, many wait for their refund check. Tax refund checks are usually received within three weeks of filing the returns. The average amount received by most people is about $3000. This is a substantial amount of money that can be put to good use.
Here are 13 different ways to use tax refund money smartly.
- Pay off accumulated debt: Paying off the interest or any penalties on your credit card debt is a good way to use your tax refund money.
You may also use this money for other debts that you may have incurred. Invest in your child’s future: If you have a child, your tax refunds can be invested in a 529 plan, which is an account free of federal taxes to help reduce the burden of student loans. This can help in your child’s higher education. Home repairs : If a home appliance like your fridge or washing machine suddenly breaks down, you can use your tax refund to carry out repairs or purchase a new appliance. You can also use this money to make repairs in damaged plumbing or electrical fittings of your house. Save it for a rainy day: You can start building up an emergency fund for unforeseen expenses. It is important to stash at least three-six months of income in a money market or savings account, which is easily accessible.
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- Spend what is left after saving: Instead of blowing up your refund on the latest gadget or gizmo, you could save 70-80% of it, and spend the rest on something you want.
- Make your mortgage payments : Paying your mortgage is a great way to save on interest and getting house payments out of the way, as soon as you can.
- Individual Retirement Account (IRA): It does not matter whether you are just starting out or in the middle of your career. In either case, investing your tax refund money in an IRA will ensure that you have a comfortable life when you retire.
- Make prudent investments : Opening a brokerage account or taking the services of online stockbrokers is a great way to invest in mutual funds or shares of a company; gauge what the markets are looking like, use the wisdom and experience of your broker and invest your tax refunds well.
- Take a vacation: If you have always wanted to take a vacation to a dream destination, but could not because of financial constraints, here is your chance to take some time off. Use your tax refund money on your dream vacation expenses.
- Donate to charity: If there are a few charities and causes you like to believe in, you can use your tax refund money to them. Most of the time, donations to charities are tax deductible and you do not have to pay any taxes.
- Get insurance: If you live in an area prone to flooding, it would be good to invest in flood insurance. Alternatively, investing in a life insurance policy if you have kids or elderly parents would be a smart use of your tax refunds.
- Double-down on yourself: If you want a certification or if you have identified a program to enhance your skills, investing in yourself can be a great way to use your tax refund.
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