Now that we are at the beginning of tax season, some of you may be expecting a refund and I may ruffle a few feathers but you’re just getting back the money that you should have received during the year anyway. If you are consistently receiving a large refund you should update your W-4 with your employer. Before you receive your refund from the IRS, you should create a plan for your refund so you are able to put it toward your goals.
Here are 7 things you can do with your tax refund:
Pay off your debt. Eliminate or reduce any high interest debt, such as, credit cards, payday loans, credit cards, car loans, student loans, etc. Taking this step will allow you to increase your cash flow, so you will have more money to finish paying off your debt or allow you to build your emergency fund.
Fund your starter savings or emergency fund. If you have not started building your emergency savings account this is a great time to start it. You can also, make a contribution to it if you have already started your account.
Contribute to your Traditional or Roth IRA. Boost your retirement savings. If you are eligible to contribute to an IRA, contribute to your retirement. This is a great option if you have a goal to retire early.
Open a brokerage account - If you have been wanting to invest in the stock market, this is a chance to start. Depending on the size of your refund, you don’t have to contribute the total amount of your refund but you can contribute a portion.
Become a peer-to-peer lender with Lending Club. If your looking to increase your streams of income. One stream of income could be from becoming a peer to peer lender with Lending Club.
Start a business. If you having been wanting to start a business but needed seed money, your refund check can be the opportunity to start your business. If you already have a business you can use your refund to invest in what you need to to expand your your business.
Break it up in Past/Present/Future. If you want to mix it up, put one-third towards your debt, one-third to spend on yourself and one-third toward savings or investments.
No matter if you receive extra money from your tax refund or a bonus, make sure you have a plan for your influx of cash so you can reach your goals.
