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April 16, 2021

Money-Smart Ways to Spend Your Tax Return

Eagerly awaiting your tax refund?

Before you start an online shopping spree or earmark the money for something really big, like an 85-inch TV, stop and think for a moment. Yes, you deserve to treat yourself, but this may be the time to do something boring and practical with your money – you may thank yourself later!

That said, we have some fun ideas that follow as well. The main thing, as they say, is to think about where you want your money to go – and don’t spend it all at once.

Start an emergency fund. Your tires could all go flat. Your refrigerator could die. You never know what you might be able to use the extra money for, and so you can never go wrong with using your tax refund for an emergency fund.

Pay off debt. It may not be the most fun thing to do with a tax refund, but your future self will thank you.

Shore up your savings. You have an emergency fund, but hopefully, you’re also putting money into a savings account for anything extra – vacations, college planning, or retirement.

Save for an upcoming expense. In other words, instead of saving for something you aren’t planning for (an emergency), use your tax refund to save for something you are planning for: summer camp for your child next year or holiday gifts, for example.

Fund home improvements. If you own a house, it’s probably your most valuable asset, and you want to keep it that way. Besides, you might find that spending money now on your home saves you more in the long run; if something isn’t fixed, like water damage, the repairs will probably get more expensive. So if you want a new roof, your tax refund could literally put a roof over your head. Or maybe with all the time you’ve been spending at home, it’s time to build that deck you’ve always wanted. And if you don’t have a house, but you’ve always wanted one? Your tax refund could go toward an eventual down payment.

Donate to charity. If you feel like you’re doing well, you can always give your tax refund, or some of it, to charity.

Source: US News and World Report. Content in this material is for general information only is not intended to be a substitute for individualized financial advice. Please consult your legal advisor regarding your specific situation.

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