Tax refunds mean extra money in most people’s pockets, but this does not necessarily mean this money should be blown on new shoes or a ritzy meal. Here are 5 smart(er) ways to spend your tax refund this year:
1. Pay off credit-card debt: Use your refund to pay off remaining balances on cards, and if you pay off your balances, you could then close cards that charge high fees. It will also put you in a more secure financial stance for the rest of the year.
2. Build a savings: A savings account is nice to have for emergency situations and for your future. You can save up for things like a new car or a house down payment. It is also nice if something unexpected happens, like a flood or a car accident. Being financially prepared for the unexpected is always comforting.
3. Contribute to your retirement: By contributing to an IRA or Roth IRA you can begin building money for your retirement. This money then becomes untouchable- so beware if you may need these funds.
4. Help your children: If you have children, you can start saving for their college fund, or pay for chores so they begin building their own financial accounts. Teaching finances at an early age will only help their future.
5. Invest in your home: Are there any upgrades you have been wanting to do, but putting off? Do you have any gaps in your insurance? Now is a great time to start taking care of your home. This will be an investment or a safety measure, depending on which option you utilize.