How to Make Your Tax Return Work for You
Whether you already received your refund or you’re anxiously waiting, you are probably thinking about the best way to put your hard-earned money to use. Here are some suggestions on how you can use your tax refund to help you get ahead:
- Pay down your debt.
Credit scoring models look at how close you are to being “maxed out”, so it’s wise to keep balances low in proportion to your overall credit limit. Depending on your particular circumstances, using your tax return to help reduce debt may be a smart way to reduce balances and help improve your credit score. - Get ahead on bills.
It’s no secret that paying your bills on time, every time is crucial to raising your credit score. In addition to on-time payments, paying more than the minimum balance due on credit cards and other high interest debt can save you lots of money in interest charges over the long run. - Contribute to your “rainy day” stash.
Unplanned expenses such as healthcare costs, home repairs, or the need to purchase a new car are often costly. Putting your tax return toward an easily-accessible emergency fund can provide peace of mind and help you avoid incurring new debt when the unexpected happens. - Use it for a vehicle down payment.
According to Edmunds, the average down payment for new and used car purchases in 2017 was about 12% of the vehicle cost. Every situation is unique, but if you’re in the market to purchase a vehicle, using some of your tax refund towards a down payment may help lower your monthly payment, help you qualify for financing, and lower your interest rate. - Invest in yourself.
Whether you’re interested in taking your career to the next level or trying your hand at something different altogether, using your tax refund to pay for additional training, an industry conference, or materials that will hone your professional skills is an investment that can pay dividends in terms of job mobility and income.
When thinking about how to spend your tax refund, take a look at your particular financial circumstances to make the best decision for you.
