Tax Refund? Here's How You Should Spend It

Tax Refund? Here's How You Should Spend It

Published Wednesday, February 24, 2016 12:00 pm by Chris Miller

While the April tax deadline may still be more than a month away, the thrilling idea of getting money back is something many look forward to even before our taxes are filed -- having followed the six ways of keeping our identity safe

If you're awaiting a refund, it’s wise to have a plan in place for how to use that cash. Here are a few financially-wise ways to invest your refund.

Save it for a Rainy Day

Money and expenses are a constant concern for many Americans. Instead of blowing your refund check, perhaps you could save yourself some headaches and put it toward alleviating some of those financial concerns. In fact, you might consider saving some (or all) of it for a future crisis.

You never know when your family might face an emergency. In an ideal world, we'd all have enough money reserved to handle all that life throws at us. But reality is that we don't. Surveys show that half of breadwinners live paycheck to paycheck, making saving a dream more than a reality.

Long-Term Goals

If you haven't planned much for the future, it might be wise to put that new cash toward your child's college education or your own retirement

Spend Some Wisely

There's also nothing wrong with treating yourself to something with your return. If you have your eyes set on a Disney Vacation or a new car, use the money to your advantage, just as long as you're still able to pay your bills and save for the future.

Reduce Debt

Getting out of high-interest debt is always a good idea. Paying off your debt early will help reduce the amount that you pay in interest. When you're able to do that, you can use that monthly payment to balance your budget or help you plan for emergencies or long-term goals.

Not sure what to do with your refund? You could always split it in thirds - save a third, spend a third, put a third toward debt. That way, you're able to enjoy it while still being financially responsible.

Have questions about saving or investing your tax return? Let us know.

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