Put Your Tax Refund to Work
Do you have a tax refund on the way? Making the right moves with your extra cash can give your financial life a boost.
What would you do with some extra cash? The average tax refund was $3,100 last year, according to the IRS. Many Americans also received stimulus checks to help with financial setbacks during the pandemic. If you’re getting a tax refund or stimulus check this year, here are some options that may help you get ahead financially.
Build your emergency fund. Saving your tax refund is a smart move because it helps you build a safety net for emergencies. Consider opening a savings account, CD or money market account to stash your cash. A savings vehicle is an ideal place to park your refund if you decide you want to use it toward something else later.
Reduce your debt. If you have a credit card, auto loan, mortgage or other loan with an interest rate higher than a savings account rate, paying down debt is an excellent way to put your refund to good use.
Ramp up your retirement savings. Using your tax refund to save for retirement can help you reach your goals faster. Consider opening an individual retirement account (IRA) or contributing to your IRA or other retirement account, such as a 401(k).
Invest in your career. Are you considering changing careers or focused on making your next move to climb the ladder? Using your refund to pay for courses to advance your job skills or help you change careers could reap rewards down the road.
Improve your home or car. Some extra cash may be just what you need to check off the projects on your to-do list. Using your refund to pay for home or car maintenance can help you avoid bigger problems down the road and increase resale value.
Treat yourself. There are times when it makes sense to spend some of your tax refund on yourself or your loved ones. If your financial situation is under control, it’s OK to consider some retail therapy for something special (and give the economy a boost). A long-awaited vacation could provide the perfect getaway, a new sofa could make your home more comfortable, or a luxurious spa day could provide relaxation and stress relief.
Make the Most of Your Refund
Not sure what to do? We can review your finances with you and help you determine how your tax refund can be put to best use. Learn more about financial planning by contacting a Amegy banker today.
This financial institution does not give tax advice. Consult your tax advisor for information specific to your situation.