Tax returns can be an exciting addition to your budget! For a whole year, we have been looking at our paychecks and grumbling about how much money we aren’t receiving due to taxes. Finally, we have the chance to get some of it back (depending on what you’ve claimed)! It’s important to make the most of this money. So, let’s set you up for a successful year rather than spending it frivolously on things you don’t need. Here are a few suggestions on how to do so!
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Tax returns are an exciting addition to your budget for the new year! I recommend to use this bonus income as a chance to invest in your future and retirement! There are quite a few companies that offer cheap or free consultations to go over your options and the types of long term investments that will benefit you and for your goals the most.
2. Pay off loans
This is one of the most productive things you can do with your tax return. Paying off your loans now will save you a lot of money down the road because it reduces the amount of interest you pay in the long run! I recently looked into reducing my loan payments per month and found that doing so would mean I would be paying an extra $20,000 in interest alone! While paying off loans doesn’t yield any fun benefits right away it will allow you to get out of debt much quicker in order to put your paychecks towards more of the things you want.
3. Divide it into categories
If you are unable to put your money into only one thing you can try dividing it up into different categories. After Sean and I got married we decided to do this with the money we received from our guests and it helped us budget out the money and not waste it on frivolous expenses. This way you will be able to put money towards investing, paying off your loans, rent, and also fun things like a vacation or something you have been wanting to buy! Even though you won’t be able to make as big of an impact on one area you will still be making an impact on multiple areas that you have been saving money for.
4. Emergency fund
An emergency fund is a smart thing to have just in case! There will always be unexpected expenses in life and if you are a planner (or maybe even more so if you ARENT a planner) you will be relieved to have a sum of money that can be put to use in those emergency situations!
5. House or car maintenance
Another smart way to use your tax return money is to spend it on improving your living space or maintaining your car! I’m sure we each have a project in mind for our house or apartment that we have been meaning to get to and this sun of money can help you finally prioritize it and get it done! It’s a great time to give your car a tune up as well to prevent any mechanical issues in the future!
Have other ideas on how to utilize your tax return effectively? Please leave a comment below to share!