4 Smart Ways to Spend Your Tax Refund
A lot of us are expecting an income tax refund this year from Uncle Sam. But before you think of spending it on things frivolous splurges, think again and use it wisely. The average income tax refund is usually around $3000, with most people receiving that money within three weeks of filing their tax returns. Whether it’s paying off debt, or simply investing in yourself, there are better ways to spend your money. Here are our top 4 ways to spend your tax refund:
1. Increase your emergency fund
If you already have an emergency fund; why not increase it? As we all know, rainy days will come but we never know how severe. Boost your funds by keeping it in an online savings account. There, your tax money will grow; thanks to power of compounding interest.
2. Invest in a retirement fund
Another best use of your tax refund is to invest in a Roth IRA, traditional IRA or a 401(k). Why? Because saving for your retirement is important. You need to make sure you have enough money to live off when you can no longer work. Also, if you have student loans or any type of personal loans, you can use that money to pay them off. Need assistance with creating a retirement fund? Our friend’s over at Insurance Smarts are glad to assist you. Tell them Williams Accounting & Consulting sent you!
3. Buy real estate
Depending on how much you received from your income tax refund, some or all of the money can be used toward a down payment for a rental property. Some properties require 20% down for a down payment on a house, so your tax refund check can help generate additional income.
4. Invest in yourself
Another best use for your tax refund money is to invest in you. Buy books on personal interests, or invest in a personal hobby. If all fails, register for a finance seminar about personal finances. The more you learn about personal finances, the more you will be able to take control of your money and achieve financial success. We even offer financial guidance and accounting tips every Wednesday on our Facebook page, free of charge.
Although we’ve provided our top four ways to spend your tax returns, we would like to hear from you as well! If your top four didn’t make it on our list, drop us a message below and tell us about it. Who knows, it might make our list for next year!
Happy Tax Season!