Put your Tax Refund to Work
Mar 21, 2023Saving Strategies
There are a lot of ways to use your tax refund. Let’s jump right in and explore a few productive ways to put your tax refund to work this year.
Create an emergency fund
Use your tax refund to set up an emergency fund. Initially aim to set aside $1,000. This should cover minor emergencies. Once you reach that goal, start thinking about how many months’ living expenses you may need in the event something major happens
and how much money you need to save each month. Be sure to factor in your mortgage, groceries, utilities and any other essential spending that you would need to cover. Then, work to set aside three to six months of living expenses to cover these unexpected
emergencies.
Saving months of living expenses can take years, so using your tax refund is a great way to give your emergency fund a boost.
Pay off credit card debt
If you’ve ever been in credit card debt or found yourself having to pay extra each month to pay down your bill, you know the invisible load and financial stress it can have on your life. People in credit card debt are often struck with absurd
annual fees and high interest rates, making it really hard to pay down. One strategy to paying off credit card debt is to balance transfer high interest debt into a one low credit card payment. At HAPO, we offer balance transfers with lower rates,
no annual fees, no balance transfer fees and no joining fees so you can take back control and pay off your debt.
Balance transferring to a low interest rate and then using your tax refund to pay down credit card debt is a winning combination for paying off your debt.
Put your money to work in a retirement account
If you’ve maximized your employer-matching benefits through an employer-sponsored plan, you could consider contributing to your own IRA or Roth IRA. Visit the IRS.gov to learn more about Traditional and Roth IRAs.
Want more? Here’s a look at other useful ways to put your tax refund to work!
- Pay down your car or home loan
- Buy life insurance
- Create a will or living trust
- Look to passive income opportunities
- Start a business
- Invest in continuing education
- Donate to a charity
- Start a child’s college fund
- Make home improvements
Annie Jacobs
Integrated Marketing Specialist | HAPO Community Credit Union