Beyond your regular paychecks or winning the lottery, it’s not every day you get a small windfall of money up front. The main exception, outside of an untimely death that comes with an inheritance? Tax season!
With the average tax refund just a little under $3,000, many people want to use their money in a smart way. But what’s the best way to make money count?
Check out this list of seven ways to stretch your tax money and make it count.
1. Pay Off Credit Card Debt
Credit card debt can become overwhelming if not taken care of quickly. It’s easy to get into the habit of spending and then watching money go down the drain between the amount charged and the interest that comes with it.
Use some of your tax refund in addition to your regular monthly payment. This can help get the debt paid off quicker and avoid additional interest compounding over the months.
2. Start Emergency Savings
You never know when an emergency is going to occur. This could be anything from unexpected car repairs, medical issues, or even a trip to the emergency vet.
Set aside some money to begin your emergency savings plan. Many people start out with saving up to $1,000 and going from there. It’s always most helpful to consider your own unique needs and what could happen in an emergency situation.
This is helpful for any situation, such as if you find out you owe the IRS money and need to pay it quickly. Learn more about paying the money you owe the IRS here.
3. Take Care of a Student Loan
You might feel that if you’re putting money down on a student loan, it’s not going to do much good. There’s so much to pay off, so how can you make a dent with your refund?
The truth is, even paying off a small amount makes a difference and keeps the interest from building over time. While using some of your tax refunds won’t clear out the debt overnight, you’ll notice progress, which can make you feel better.
4. Create a College Fund
Perhaps you have a child or teenager, and you’re not sure how you’ll pay for their education. You know the benefit of school and what quality education can do to make a difference in their life.
Use a portion of the money to give your child a start in their schooling. You can always add to it over the months and years, allowing it to build. This way they’ll have a useful amount by the time they’re ready for college.
By starting a college fund now, it becomes easier to add money to it once established. Even if your child elects to attend a different school, this money can still be used to fund their education.
5. Invest in Stocks With Your Tax Refund
If you’ve always wondered what it’s like to play the stock market but felt apprehensive about using money from your paycheck, now’s the time to take a chance and find out.
Use some of the money to start trading in stocks you’re familiar with. You can always do research and find out what’s profitable, but it’s helpful to start with companies you’re already familiar with and follow.
You can start out small with a few stocks and add to them as time goes on and you feel more confident about your skills in playing the market. Eventually, over time, this can build up to a sizeable investment that can pay out, if you learn the game and how to play it.
6. Put It Toward Your Career
An investment in your career can make a difference in your ability to move up within the ranks and land a better paying position. If you’re not where you’d like to be financially or you want more of a challenge, investigate what you’d need to take the next step.
For some people, that involves going back to school. Others only need a certification or building on your skills. Find out what would make a difference in climbing the ladder in your career and research how much money it would take to start the journey.
Even if your tax refund won’t give you the full amount you need to make the change you’re wanting, it’s easier to start once you’ve already made some headway. Knowing you can apply yourself to further career goals once you’ve taken the first steps is easier.
7. Start a Business
Maybe you’d like to break away from the rat race and do something different than what your current position allows. This could range from starting a consulting business with your current skills to doing something totally different and outside your current industry.
If you’ve always wanted to make the move toward your own business but finances held you back, see how your tax refund can help. Use it as a downpayment for office space, get equipment that you need, or seek out the education you need to complete your skills.
No matter how much you get back from the IRS, there’s a variety of ways you can stretch your tax refund to make it work for you. From starting a business to paying down current debt and even planning for the future, it’s possible to prepare for the future with the money you get back from the government.
If you’re looking for more ways to save money, we can help. Check out our blog and see how you can get started today.