Now that April 18th has come and gone, you’re probably eagerly awaiting your tax refund (if you’re going to get one). If you’re a spender, you might have already decided to use that money on your next house project or family vacation. If you’re a saver, you’re probably wondering if you should deposit it straight into your money market account or invest it in your Roth IRA. Either way, now is the time to start thinking about how to use your tax refund wisely.
Remember, a tax refund isn’t a monetary gift from Uncle Sam. It’s the return of your own hard-earned dollars that you loaned to the government throughout the year. When you think about it that way, it’s a lot harder to spend it frivolously. Trust us—your future self will thank you for spending your tax refund wisely to make powerful money moves.
Five Ways to Spend Your Tax Refund:
1. Invest for retirement.
One of the best things you can do with your tax refund is to invest it for your future. That’s right—retirement. When you put this money in your Roth IRA or invest in mutual funds, the power of compound interest will take over and help you reach the retirement of your dreams.
2. Open a college fund.
Instead of your own financial future, use your tax refund to bless your kids with financial well-being. The earlier you start saving for their college education, the better. Open up a 529 College Savings Plan and put that tax refund to good use.
3. Purchase real estate.
Have you been thinking about purchasing real estate? Maybe you want to buy a vacation home, some land, or a rental property. Using your tax refund to purchase real estate is a powerful money move that could benefit you for years to come.
4. Pay off outstanding debt.
It may not be the most fun way to use your tax refund, but paying off debt is a huge way to help build the foundation of your financial future. When you pay off old debt, you’re able to utilize more of your monthly budget for things like giving, saving, and investing.
5. Build your emergency fund.
These days, having an emergency fund is a smart money move that you don’t want to ignore. When you build an emergency fund of three to six months of expenses, you’ll have more peace when “life” happens. And it happens to all of us: the cars need new tires, the roof needs replaced, or your company goes out of business. Whatever the event, an emergency fund will be there to help you get through it.
Like we said earlier, a tax refund isn’t really free money. It’s your hard-earned dollars that you’ve been loaning to the government. Now that you’ve got it back in your pocket, why not make a dent in a big financial goal like retirement, blessing your family members, or even purchasing property? Invite a SageSpring Wealth Partners advisor to help you make these powerful money moves. Your financial advisor will take the guesswork out of investing, saving, and working to build your financial future.
Contact your advisor today and they’ll help you come up with even more unique ways to spend your tax refund tailored to your goals.
