By: Stella Katsipoutis
If you’re getting a tax refund this year, we know it’s awfully tempting to splurge it on a big-ticket item you have been dreaming about but haven’t been able to squeeze into your everyday budget. (A new flat-screen TV, perhaps?) But no matter how large or small your check from the United States Treasury is, there are a lot more practical ways to put your money to use. When that highly anticipated direct deposit arrives in your account this spring, consider these smart alternative options for spending your tax refund.
Based on information gathered from the United States Census Bureau and the U.S. Federal Reserve, ValuePenguin found that 38.1% of all American households carry some type of credit card debt, which averages at $16,048 for balance-carrying households. Rather than using your money to buy a material object that you want but don’t necessarily need, why not put it toward a credit card balance that might be hanging over your head? Not only will it help ease some of the stress of owing money, but it will also help improve your credit score. Think of it this way: You’re eventually going to have to pay it off anyway, so it’s better to do it now that you have some extra cash on hand instead of pushing it off for later—and possibly paying more in interest.
No matter what your age is, it’s never too early to start saving for your retirement. A recent survey conducted by GoBankingRates revealed that roughly one-third of Americans have no money set aside for retirement. This is a scary number, considering Social Security benefits are only getting slimmer and the cost of living is getting higher each year. Don’t put yourself in a dire situation where you’ll have to scramble for money when you should be enjoying your retirement. Start saving now—or add to the savings you already have—by depositing this year’s tax refund into your retirement account, whether it’s a 401(k), an Individual Retirement Account (IRA) or a savings account you’ve specifically dedicated to your retirement. You may not get the instant gratification of making a big purchase, but you’ll be thanking yourself when you have a nice big nest egg to fall back on years down the road.
Whether you’re at home or on the road, you just never know when disaster will strike. Don’t get blindsided by big unexpected expenses like house repairs or medical bills; be prepared to meet them head-on by building up a robust emergency fund now. It’s recommended that you stash away three to six months’ worth of monthly expenses for emergency savings, so what better way to start meeting that goal—or exceeding it—than by saving your tax refund for a rainy day? Between monthly bills and everyday obligations, it can be difficult to scrape together some money for your savings at the end of the month. So when you receive a nice check in the mail, it’s the perfect opportunity to either start your savings or put away a little something extra.
If you need help managing your money, stop by any VyStar branch and ask how a Money Makeover coach can help you reach your financial goals.
Now it’s time for you to tell us: How do you plan on spending your tax refund this year? Comment below!
The content provided in this blog consists of the opinions and ideas of the author alone and should be used for informational purposes only. VyStar Credit Union disclaims any liability for decisions you make based on the information provided.