According to CNBC, 74% of Americans received a tax return in 2020. That’s three quarters of those who filed! With Tax Day just days away, if you’re receiving a refund, it’s time to consider your options.
Add it to your emergency fund.
Everyone should have a “rainy day” emergency fund built up with three to six months of expenses for those unplanned occurrences in life. It would be rational and financial responsible to add your tax return to this fund to supply extra cushion and comfort.
Pay off debt.
Whatever it may be - credit card debt, student loans, medical bills, mortgages, car payments - use your tax refund toward paying this off. You’ll feel great seeing your debt drop!
Use for a big purchase.
Have you been saving for a specific purchase? Use your tax refund to either make the purchase or add to your savings and watch it grow.
Contribute to tax-sheltered accounts.
Think of your future or your child’s future. Consider adding your refund to your retirement account(s) or any education plans. This money will come in handy down the road.
Seek out the help of a financial professional to invest your money or use one of the DIY apps. Do your research before investing, keep your emotions out of it, and if it’s an up day, your money will grow!
Continue your own education.
Put this money toward continuing your education or taking certifications to help advance you in your career. This would be a personal investment in yourself and your career.
Give to charity.
Giving back is such a reward - period. If you choose to give your tax refund away, please be sure to save this information for tax time next year.
Splurge! What is that one thing you have always wanted, but didn’t need? Is there a trip you’d like to take? Have you been wanting to re-do your home? Use your tax refund for something fun!