How to Use Your Tax Refund Wisely
March 14, 2019
‘Tis the season to file your tax return, and maybe even receive some money back. When extra cash comes your way, it can be easy to use it to treat yourself. But what if those dollars could be used for something bigger, better, and maybe even more meaningful? Before you let your return burn a hole in your pocket too quickly, take a step back and consider allocating funds to one of these financial priorities.
Pay off lingering debts.
Is your debt holding you back from taking the next step or getting ahead? Unwanted debt can be a heavy burden when you are trying to maximize monthly savings. Putting your tax refund toward private student loans, credit card balances, or auto loans may not be the most glamorous use for the extra cash, but it could lighten your load of overhead expenses, especially if you tackle high-interest debt first. If you can’t pay off your debt completely, even an extra payment can make a difference in the long run.
Boost your emergency savings.
Are you financially prepared for the unexpected? Having a cash cushion is always a good idea. Ideally, the balance of your emergency savings account should be enough to cover six to nine months’ worth of living expenses. You never know when life will throw an unexpected curveball, so your tax return could serve as a safety net in the event of surprise medical expenses, the unfortunate loss of a job, or any other financial setback.
Invest in your golden years.
Are you confident that your retirement savings plan will help you achieve your goals and live the lifestyle you want when it’s time to wrap up your career? With some additional cash to allocate, now may be the perfect time to reevaluate your investments. From investing in real estate to a specific retirement savings vehicle, there are many ways to ensure your cash is working for you well into the future.
Share the wealth.
So, what happens if your savings plan is in tip-top shape, you have paid off unwanted debt, and are confident in your retirement savings? Consider donating to a non-profit organization that benefits a cause that you care about. Your goodwill can pay dividends for others long into the future, and your donation could even qualify to be claimed on your taxes next year, too.
If you are looking for additional guidance as you strive to make smart decisions with your dollars, Lakeland Bank is always here to help. We can point you in the direction of effective savings and financial planning options when you’re ready to step up your strategy.