It can be extremely tempting to use your tax refund to reward yourself with a mini-vacation or buy something you’ve been wanting. Unfortunately, when the money is spent it’s gone for good and you’ll still be looking at the same debts as before while trying to make ends meet. The following is a list of the smartest things that anyone can do with their tax refund.
Pay off any credit card debt if possible or a significant portion of it. Depending upon your individual circumstances, you may choose instead to pay down student loan debt.
Consider an educational fund for your children. Costs continue to increase and an education fund will lessen the student loan burden when they seek a degree. You may want to take advantage of continuing education for yourself and the fund may even be tax deductible.
A major car repair, medical expense, or job loss can happen at any time. An emergency fund will help meet those challenges without breaking into the rent money.
There are dozens of home improvement projects that are necessary, but it may be difficult to handle the cost all at once. A new roof, more efficient air conditioning, or a bathroom or kitchen update is a good investment, especially if you’re thinking of selling your home.
A life insurance policy is one of the most overlooked precautions for families. A term policy can provide for final expenses and pay off debt upon your death.
Make extra payments on your mortgage. More of your monthly payments will begin going toward the principal instead of interest.
The time for retirement will arrive sooner than you think and you need to be prepared. Consider putting your tax refund into a traditional or Roth IRA where it will stay safely tucked away when you’re no longer working.
Establishing a separate savings account from your primary savings and checking will keep the money out of sight and out of mind. You won’t be tempted to spend it on impulse buys.
Start a Business
If you’ve ever dreamed of being an entrepreneur with your own business, a tax refund can help you realize that goal. The best part is that you don’t have to quit your regular job while you’re building your brand.
At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs. We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!