Did you get a little misty-eyed when you receive your tax refund? Don’t worry — there’s no judgement here. Most people feel a flood of relief rush through their body when they realize the IRS has to cut them a check instead of the other way around. But don’t let this feeling stop you from what you need to do.Last year, the average refund was $3,000. That’s a lot of money to work with. If you didn’t immediately think of something to do with your check, here are three ways to get the most out of your return.
Deposit it in a savings account
As the least fun option, it also happens to be the most financially responsible one. Depositing your tax refund into a savings account promises to pay off in the long run — if done correctly. If the IRS deems you overpaid by a significant amount, you may have a large enough sum to qualify for a high-interest savings account — many of which have minimum balance requirements. This high-interest version of your basic savings account can grow faster. This emergency fund can help you sleep peacefully knowing you’re prepared should the unexpected test your finances.
If you have your retirement or any large purchases in mind, think about shifting gears and investing in a 401(k), stock portfolio, or mutual funds. When untouched, these long-term investments mature over several years with an interest rate that surpasses inflation, giving you the greatest opportunity to prepare for your future.
Make a big purchase
Your wish-list is probably pretty long when things like a new car or that new iPhone X make an appearance. Your tax refund can help you knock one of these fun items off your list. But if your refund is just shy of covering the whole amount, be wary of using the last of your savings to make up the difference. You might experience whiplash from how quickly you go from being flush to being in the red.Emptying your savings of cash leaves you unprepared for any unexpected bills or repairs in your future.
Luckily for anyone who goes over their budget this way, there are quick and easy cash loans available online. They fill a need between paychecks when important bills and repairs arrive at a time when your finances can’t cover them. Fintech companies like MoneyKey offer an online alternative to conventional financial assistance. They remove much of the complexity bogging down the typical borrowing experience. As a result, you can get payday loans from MoneyKey.com faster and with less stress than traditional lenders.
These cash advances are an ideal backup should you let your refund leave you in the lurch, but only as a last resort. You’re better off tempering your shopping spree, making sure to match your receipt to the government’s check.
Though your refund might not bankroll a trip around the world, it can help you organize a domestic trip to New York City, San Francisco, or New Orleans — three popular American destinations. Consider focusing on cities that take less than three hours to get to by plane. You can further the purchasing power of your refund by checking all the dos and don’ts of traveling:
|Book in advance||Wait to book until a week before you leave|
|Use apps to find discounts or vouchers on air fare, accommodations, restaurants||Pay full price for any part of your trip|
|Speak with the concierge at your hotel — they offer free suggestions on how to spend your time||Hire a travel agent — they charge you for the advice they share|
At the end of the day, think about it!
Before your extra spending power gets to your head, take a moment to think about your financial needs and wants. Whether you choose to get your financial house in order, shop from your Amazon wish list, or visit some place new, make sure you have a refund strategy that works for your financial situation.