Positive Actions for YOU with Tax Refunds
The Big Question…Spend It, Save It, Invest It
The extra money from your tax refund makes a HUGE difference, right?
Bet you’re excited about the ways you could spend it!
Before you proceed with your plan, take five minutes and scroll through four points to consider before taking action.
4 Tax Refund Choices
Make wise decisions with your tax refunds. For example:
- No savings? If you don’t have savings for emergencies and your future, savings is IMPORTANT.
- Got bad tires? If you can’t get to work, how can you pay your bills? If your tires are unsafe, new tires are smart.
- Need to fix it up? After savings special projects that add value to a house you own are always wise.
Compounding and capitalized interest are expensive! And it can keep you stuck making no progress toward paying off your debt. Even if it’s not an exciting way to use your refund, choosing to payoff/paydown your most expensive debts can make a big difference in your monthly budget.
For example, if you use a $1,200 refund to pay off a credit card with an 18% interest rate and a monthly payment of $110—you’ll have:
- Less debt.
- An extra $110 per month to put in your savings account.
- If you save $110 per month, at the end of the year, you’ll have $1,320 in your savings!
Four Basic Choices
Wise Long-term Choices
Put it in savings. Experts recommend at least three months of your monthly expenses in your savings account to cover emergencies.
The formula is: $1,000 (monthly expenses) x 3 months = $3,000 needed in savings.
Putting $250 a month in your savings account for one year would accomplish this goal. This amount is the equivalent of 25% or ¼ of your monthly expenses every month for one year. OR, depositing your refund is a responsible and excellent step toward building your savings account and may be enough to cover or make a big dent in your savings goal!
Invest your tax return. Using your refund to purchase an IRA or deposit into a retirement account is also wise! Retired Americans will tell you that Social Security payments are not enough to live on. Begin investing in you and your future today by saving money for retirement every year!