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5 Smart Ways to Use Your Tax Refund

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It’s tax season again. If you are one of the 100 million plus Americans expecting a tax refund, do you know how you are going to use the money? Here are five suggestions on smart ways to use your tax refund.   

1. Create an emergency fund

There aren’t many things that can derail your budget quite as fast as an unexpected expense. Car trouble. Unplanned medical procedures. Without money set aside specifically for emergencies, common events like these can leave you stressed and scrambling. So, before you do anything else, why not use your refund to build an emergency fund of $1,000 as quickly as possible? You’ll be glad you did.

2. Pay off high-interest debt

It’s hard to make financial progress when you spend hundreds of dollars a month on interest payments. If you have high interest loans or credit card debt, think about using your tax refund to eliminate it. Start by paying off the lowest balance first, then use the monthly savings to start paying off the next lowest balance—and so on, and so on. Your refund may not get you completely out of debt, but it can get you moving in the right direction.

3. Start a savings habit

Once you’ve got an emergency fund set up and your debt under control, it’s a great time to put your tax refund to work. While traditional savings accounts are a reliable place to keep your money safe, you can maximize your tax refund, manage your risk, and grow your money even faster by investing it in high-yield alternatives such as Share Certificates, IRAs, Roth IRAs, or Money Market accounts.

4. Buy something you need

We all have those things that we’d rather put off until later. You know, inconveniences like car maintenance, dental work, or minor home repairs. When you’re faced with covering these expenses out of your regular income, it’s easy to move them down your priority list. Unfortunately, if they’re not addressed eventually, they can wind up costing far more than they should. Your tax refund is the perfect solution for these unavoidable expenses.

5. Treat yourself 

You didn’t think we would skip this part, did you? While you’re being responsible with the money from your tax refund, don’t forget to do yourself a favor and live a little! Enjoy a day at the spa. Order that fancy new accessory you’ve had your eye on. You may not be able to justify the purchase out of your regular budget—but after being smart with your finances all year, you’ve earned the right to have a little fun.

With all these options in front of you, it can be hard to figure out which step to take first. That’s where your credit union can help! Our team of financial specialists are ready to sit down with you, discuss your financial goals, and help you chart a path forward. Call 800.548.5465 or visit a branch today.