How to Spend Your Tax Return Wisley

Tax season is finally here, which means you probably have a long list of things you’re going to buy once you get your return, right? If your resolution this year is to be more confident and wise with your money, then you may want to make sure you’ve done these things before you actually go blow your cash. By all means, we all deserve to treat ourselves, however, make sure you don’t go on a spending spree. Here are the best ways to spend your tax return after this season.

Pay Down Debt

Your tax return most likely won’t be able to cover all of the student loan debt or mortgage amount you have out, however, high-interest, short-term debt, such as credit cards, could be what’s keeping you down in the dumps. One of the best things you can do to help save your credit score and lift some weight off your shoulders is to pay off your credit card debt. Credit cards are sneaky little creatures as they tend to have a high interest rate that could be what’s keeping you from paying off your total balance and lowering your credit score each month. If you have multiple cards, begin by writing out your balances for each one, along with the interest rate. The cards you should be paying off first are the ones with the highest rate. You can also use your tax return to split it up in multiple monthly payments to show that you are consistent each month.

Open Emergency Funding

Over 66 million Americans don’t have an emergency savings account. This is quite possible the most critical point in the U.S. debt crisis. Many believe that a small amount of cash, won’t help them when a true emergency comes along, however this is wrong. The slightest bit of savings could help you cover emergency expenses in such a case. Starting an emergency account with your tax return can actually help you save more money each paycheck, compared to trying to open an account with no money. By using your tax return to open a cash account, you’ll inspire yourself to contribute more, and you’ll be very thankful for doing this when life decides to take a turn. Although taxes are technically your money being deducted to the IRS, think of it as a yearly bonus that you weren’t expecting to get.

Invest

If you’ve already paid off your credit card debt and have an emergency fund already established, spending your money on investments is a great way to ensure you’re being wise. For example, maybe you’ve been saving for a home and can afford the monthly payments, but not the huge wad of cash that you need for a down-payment. Using your tax return could be the solution to your predicament, only if you’re really ready for the purchase. If you don’t already have a retirement plan set in place, taking this extra amount of cash could also be a great way to start one. Just like starting an emergency savings plan, starting a retirement plan with cash will convince you to contribute more money each month. Another way to invest your hard earned return is in yourself. Maybe there’s a skill or class you really want to take, but it’s too costly. You can never go wrong in investing into experiences, as if will help you grow into a better person.