It’s tax month! Before you spend your entire refund on a shopping spree or exotic vacation, consider four ways your refund can make a big financial impact on your household budget, asset portfolio and financial health.
- Boost Retirement Savings
Are you lucky enough to work for an employer that matches your retirement savings? Take advantage of that free money and increase your contribution to ensure you get the maximum matching funds. You probably won’t miss those dollars in your paycheck now, but it will grow and make a big impact on your future retirement. Plus, your tax refund check can go into a designated account and cover gaps in your household budget if needed.
- Pad Emergency Savings
Do you have enough money saved to cover emergencies like a broken washing machine, damaged roof or health insurance deductible? Many financial planners suggest households save at least three to six months of living expenses. Pad your emergency savings with your tax refund, and be prepared for whatever life throws at you in the near future.
- Pay Debt
The average American household carries $15,611 in credit card debt according to the Federal Reserve. Erase that burden or at least reduce it thanks to your tax refund. Apply this money to the debt balance with the highest interest rate. Whether it’s credit card debt or a student loan, car loan or mortgage, reducing your debt boosts your momentum to keep working toward financial freedom.
- Update Insurance Policies
Have you been putting off boosting your insurance coverage or buying a dental or life insurance policy because you couldn’t afford it? Turn your tax refund into insurance coverage. Your agent can provide details about coverage and costs to make sure you get insurance that’s right for you.
This tax season, take charge of your refund check and use it to make a big financial impact. Which one of these steps will you take this year?