If you’re receiving a tax refund this year, you might be tempted to splurge and make a large purchase. If you have other financial obligations, however, you may want to reconsider. The following are some ideas for putting your tax refund to good use:
Take care of the necessities
If there’s something you really need, but you’ve been waiting because you couldn’t afford it, your tax refund might be able to take care of it. For example, if you need extensive dental work done or your car needs some costly repairs, use some or all of the money you’ll be receiving from your tax refund.
Put it towards college
Have you thought about going to college or a technical school, but the cost of tuition has been holding you back? Whether it’s an entire semester or just a single class, use your tax refund to contribute towards your college fund. On the other hand, maybe it’s your child’s college fund you need to save up for. Even if your tax refund isn’t that much, every little bit that you can save can go a long way when it’s time for your kid to go to college.
Put it towards your retirement
If you haven’t started saving for retirement yet, consider starting now and with your tax refund. Even if you already have a retirement fund going, contribute a little extra by using your tax refund.
Pay off debt
If you’ve racked up a lot of debt with loans and credit cards, use your tax refund as an opportunity to make a dent in it. Consider using your entire tax refund to pay off a chunk of your debt, or even pay off an entire account completely.
Use it towards your down payment for a home
If you’re thinking about buying a home and applying for a mortgage, you’ll need a down payment. Saving up for a down payment can take a long time, so consider saving your entire tax refund for your down payment. Whether it’s a couple hundred or a few thousand, you’ll be that much closer to having what you need for your down payment.
On the other hand, you might already own a home, and maybe there’s been a much-needed renovation project you’ve wanted to tackle for some time now. If you haven’t had the funds for it, that tax refund might just what you need to finally take on that project. If your home needs a lot of work overall, try focusing on a project that can increase your home’s value, while also saving you money over the long-term. For example, if you’re spending way more than you know you should be on air conditioning and heat, make sure your home is properly insulated. If it’s not, consider fixing your home’s insulation issues.
Buy a car
Depending on how much of a tax refund you’ll be getting, it’s possible to purchase a functional and practical car, and without taking out a car loan. Whether you’ve needed a car for a while now, or you’re tired of making monthly car payments, consider the benefits of buying a car in cash and owning it free and clear.
Just save it
Whether there’s something you’re saving for specifically, or you’re just working on an emergency fund, you don’t have to have a plan for your tax refund. Just put it in your savings account and forget about it, and use it for a rainy day if you ever need it.
Do you need money to take care of expenses and bills? Peachtree Financial Solutions may be able to help if you’re receiving long-term payments from an annuity or structured settlement. Contact Peachtree Financial Solutions today for more information on selling future payments for a lump sum of cash.
Nothing above is meant to provide financial or tax advice. You should meet with appropriate professionals for such services.