Ah, tax season. Most people dread filing taxes, but what about the sweet, sweet victory of earning a refund at the end of it? Because most of us look at tax season as a negative thing, we often forget that it typically comes with some extra money that we need to be smart about. It’s so easy to blow all of the money in the first week or two simply because it hasn’t been included in this month’s budget.
Whether you’ve already gotten your refund or you’re expecting to get it soon (or even if you still haven’t filed your taxes… it’s okay, no judgment), it’s time to plan where that money is going to go in order to prepare well for you and your family.
Here are our top tips for putting that refund where it belongs:
Put it towards an emergency fund. If you don’t already have an emergency fund, what better time to create one than when you have a little extra cash coming your way? If you have one already, now is a great time to pad it by adding to it. Going above and beyond what you expect to need will help ensure you’re safe and taken care of if it ever comes down to it. Plus, this can help alleviate stress when thinking about the event of an emergency.
Save! If you don’t have anything that you need right now and you feel good about where your emergency fund is, then put all of your refund money in savings. This is an awesome way to boost that number easily and to feel better in the long run, especially when it comes time to dip into your savings later.
Divide it up into different accounts. Consider your kids! Your tax refund can be a great thing to put towards their college or retirement funds each year. Maybe you want to divide it up into their funds, your savings account, and your emergency fund. Dividing it up can help tackle many things at once.
Invest. If you’ve never invested before or haven’t done as much as you would have wished, now is a great time to get serious about investing. If done correctly, you could turn your refund into a serious amount of cash down the road. If you’d like some tips on how to get started or need some advice, don’t hesitate to reach out to us.
Prepay. Get ahead on those bills! If you’re a homeowner, your mortgage would be one of the best places to put this money. You might also want to consider the debt you’ve been trying to pay down and what seems to be the biggest burden on you and your family.
Treat yourself. At the end of the day, this is your money that you still earned over the year, so you deserve to enjoy where it goes! The other items on this list will have long-term benefits and ultimately make you happier, but that doesn’t mean you can’t put some of it towards something a little more present. Even if you just take out a small portion of your tax refund to spend on that jacket you’ve been eyeing, the dining room table of your dreams, or a spa day, don’t feel guilty about it (as long as you’re not sacrificing anything truly vital).
What are you planning on doing with your tax refund? If you need any tips or still have questions about how to best plan for your future and your family’s future, download our app or reach out to us here.
As a bonus, chat with Benjamin in the app - where he’ll answer your questions and help you understand how your taxes will change with the new laws. Chat with him in the app!