Getting a tax refund is like receiving a slightly unexpected gift. You usually know when you’re going to get one, but you won’t likely know the exact amount until it has been computed. When you do receive your check (or direct deposit, depending on the option you select) it can be tempting to run out right away and spend it on something fun for yourself. Instead of selecting this option, wait a bit and use it one of these strategic ways.
Pay Off Your Debt
Paying off debts isn’t exciting, but it’s a really solid way to use your funds. Debt just continues to build on itself, and carrying it has a negative impact on your overall credit score. A particularly hefty check from the government can have a big impact, even if you have substantial debt.
Jump Start Your Savings
Everyone needs a rainy day fund. If you’re looking at a fairly substantial amount of cash from your tax returns and you have little savings, put it in there. You’ll feel more secure throughout the year knowing that you’re prepared if something unexpected required a spike in spending. Similarly, consider putting a bit into your long-term savings. If you are finding in the short-term, having yourself prepared for the longer term can be a very positive change.
Make An Investment
Purchasing stock or even real estate can also be a good way to use the funds. Just be careful to do your research beforehand. Don’t get over invested in real estate, especially if you have no good way to shoulder continuous payments on it after your initial check runs out. Stocks are less hazardous, but they can be exceptionally volatile. Talk with your financial planner before making any decisions here.
Start An Education Fund
College is expensive, but it’s a worthwhile investment for virtually all careers. Use your tax returns to start saving for tuition for your child, or start a fund for yourself. Everyone benefits from education, but justifying the expense isn’t easy. After a few years of saved tax refund checks, you may be able to pay tuition outright if you choose an inexpensive state school.
Buy A Bond
The government makes it easy to buy a bond with your check, and for good reason: you’re putting your money right back into government initiatives. Buying bonds is generally safe and provides a decent return on investment, especially considering how little risk is involved.
Good coaches know that injuries happen and at times they can lose their best players for weeks and months at a time. If they don’t have strong players waiting on the bench then the entire season could be a waste. Sure they could trade those talented players and make more money for the team and owner, but if they really want to compete and succeed through the entire season they better have a strong bench.
Any of these will help you utilize your tax refund wisely, rather than squandering it within days of receiving it. Remember that investments are something that will mature over time, and should probably not be prioritized above paying off debts. If you’re uncertain, contact your financial advisor for recommendations based on your unique financial situation and the particular details of your refund. For more information visit www.taxreturn247.com.au today.