Make the Most of Your Tax Refund

As you wait to receive your tax refund, it’s easy to get excited about all the possibilities for how you can use that money. It’s natural to want to reward yourself when you receive your tax refund, a bonus at work, a commission payout, or any other extra money. It can be tempting to splurge on a large purchase, but remember: this is your money that you worked hard for! It deserves the same responsible money management as your other income. That’s not to say you can’t have fun with it, but it will be of greater benefit to have a plan for how to spend your money so you can make the most of it.

Grow Your Savings

It’s always a good idea to use extra money to bulk up your savings account. Whether you’re saving up for something specific or just for a rainy day, the additional funds you put in now will add up for your future. Especially if you earn interest on the account, like with our savings accounts. Adding to your savings account every chance you get makes sure that the money is there when you need it, no matter what it’s for.

Add to Your Emergency Fund

An emergency fund should have enough money to cover you in the event of a major financial setback, such as a global health crisis, loss of income, unexpected repair bills, or other financial emergencies. The standard recommendation for emergency funds is to have at least 3-6 months of living expenses saved up, but that amount can seem daunting when you are starting your emergency fund from zero. Using your tax refund is a great way to get your emergency fund started, or to give it an extra boost to get you closer to your goal. Our Super Saver Certificate is a great way to help you start or build your emergency fund, with higher dividends so your savings grow faster, plus one penalty-free withdrawal for when life throws you a curveball.

Pay Off Debts

One of the most beneficial and responsible choices you can make with your tax refund is using it to wipe out or pay down debt. Especially high-interest debt like credit card balances or student loan debt. Eliminating debt relieves you from monthly payments, thus freeing up more room in your budget. Paying off debt also allows you to save up to hundreds or even thousands of dollars in interest payments over time. Even if you can’t pay it off completely, pay down as much as you can.

Save for a Down Payment

If you’re in the market for a new car, your tax refund can help you get started with a down payment. If your current car is getting older or it no longer meets your needs, now may be the time to start planning your upgrade. Starting to car shop before you absolutely need to buy a new car right away puts you in the best position to have ample time to do your research and not feel pressured. That way when you’re ready to buy, you will be prepared with a down payment, plan to finance, and know exactly what you’re looking for.

Improve Your Home

Depending on the size of your refund, you may be able to finance the home improvement project you’ve been dreaming of. Using your tax refund to improve your home is like a hybrid of spending and investing. You’re using the money for something you enjoy and will directly benefit from in the short-term, and it increases the value of your home thus increasing its resell value for the long-term. And if your tax refund alone isn’t enough to fund your entire project, our Home Equity options can help you make up the difference.

Treat Yourself

After all, your tax refund is your money that you’ve worked hard for. It goes without saying that you won’t benefit from spending it all on luxury purchases that you don’t really need, but that doesn’t mean you shouldn’t set some of your refund aside for yourself. Treat yourself with smaller purchases as a way to reward yourself for investing the rest of your refund wisely. Whatever you choose to spend your money on, make it something you want and enjoy. You earned it!

No matter how you spend your tax refund or any other extra money that comes your way, it will serve you best to have a game plan for your money. Take time to determine which option works best for you, and commit to your goals before the deposit hits your account. Remember, we are always here to help guide you through financial decisions. We’ll work with you one-on-one to determine which of our savings options is right for you and help you develop a money management strategy. Contact us to learn more about how we can help you make the most of your money.

At Robins Financial Credit Union, our mission is to enhance the financial well-being of our members and community. We honor this commitment by providing educational content to help you make the most of your finances. Read our other blog articles to help you gain the financial knowledge you need to succeed.