Tax season is coming to an end and people are collecting their refunds. Many see a tax rebate as an additional payday from Uncle Sam, but in reality, they are getting back their earned income from the past year. Depending on individual circumstances, there are many ways to spend or invest your refund wisely.
Pay Off Lingering Debt
Nothing feels better than paying off some long-term debt. Get that feeling off your shoulders by spending your return on credit card debt and unpaid or late bills. The best thing you can do is to eliminate or take a sizeable chunk out of high-interest debt.
Start an Emergency Fund
Surprises come at the most unexpected times. The best way to be prepared for any unexpected events is to build an emergency fund. Experts say to save enough to cover three months of bills, rent, and other annual expenses. It’s important to have a separate fund that you only touch in the case of emergency because a major unexpected expense could break your bank and force you into financial concern.
Use your surplus of funds to make a difference in your community or something you care about. Donating to a great cause or foundation is rewarding and beneficial to people in need. Plus, next year you can use this as deductible donation when you file!
Spend it on Necessities
There’s always a need through the year for big purchase items. If you’re in need of a car repair or home improvement, your tax return could be the perfect chunk of change to put toward those expenses. Take care of the things that need fixing so you don’t have to worry about not having enough money to cover the costs in the future.
If you’re in the right financial situation, it can be okay to splurge a little. Spend your return on something you’ve wanted for a while. You shouldn’t feel guilty about spending that money on a family vacation. Building a tight family relationship is priceless.
No matter what size of return you’re expecting, it’s important to remember to spend it wisely. Either use it to get ahead in saving, put it towards important expenses or simply to treat yourself.
We are happy to have provided tax services to all of our clients during the 2017 tax season and throughout the year. Thank you for choosing Schlenner Wenner & Co. as Central Minnesota’s Best Accountant!