If you’re expecting a tax refund this year, you need to have a good plan for your money. Having additional money in your pocket is easy to spend on things that you don’t need. Having a stable plan to filter out expenses, needs, and wants is essential, here’s a little guide on how to spend your additional cash wisely.
Spend It On Necessities
Is your car breaking down on you? Are you running low on essentials? Have you put off important dental work? You need to take care of these necessities, and once you collect your refund, you may be able to cover the cost.
Start or Increase Your Emergency Fund
Knowing someone with an emergency fund is hard to come by there days. But what you should know that is without an emergency fund, just one surprise major expense can send you on a debt spiral toward financial disaster. Many experts say that your fund should contain about six to eight months’ worth of savings. That way, if in case of emergency, you’ll always have a back up. Just don’t dip your hand into the cookie jar for a new pair of boots.
Pay Off High-Interest Debt
After establishing an emergency fund, the next best thing you can do with your tax refund is reduce or eliminate any high-interest debt that you’re carrying. Paying off these high-interest debts can reduce the time paying off these debts, which in time, you’ll have that extra money back in your pocket and elimate any interest on those debts as well. Saving you lots of money.
Growing your money by throwing it into profitable accounts is a long-term way to increase your funds. Apps like Acorns, or consider opening a brokerage account with a discount broker (such as Scottrade, TradeKing, or Sharebuilder. These are all great ways to put your money into and see it grow over time.
Spend It On Something You Want
You’ve saved and put away all the money you could. Don’t feel guilty by taking a little getaway vacation or taking your friends out to a nice dinner. It’s nice to splurge here and there, just don’t get carried away and get into debt.