Tax season has officially arrived. While the thought of filing taxes may stress you out, the thought of receiving a tax refund can make your wheels spin. Before you plan any major purchases, or splurges, it’s time to examine other options for your tax refund.
Life can be expensive. Often, that means holding off on buying something you want to pay for something you need. For many of us, paying for necessary items or saving for the future is the best option for your 2017 tax refund.
Here are 5 ways you can responsibly use your 2017 tax refund.
- Pay down debt. This may not be the most exciting option for a tax refund, but paying off or paying down bills means less of your monthly income will be used for future bills. Whether it’s paying off credit card balances, a car loan, or making an extra mortgage or student loan payment, taking steps toward reducing debt is never a bad idea.
- Put it in a rainy day fund. If debt is not a large concern for you, putting your tax refund in savings is a good idea. It is generally recommended to have between three and six months saved up in an emergency or rainy day fund. If you do not have that much in your savings, your refund will help you get closer to your goal. At Fidelity, you have the option to open a savings account or a CD with us!3.
- Invest. Putting your money to work for you is always a wise choice. Although this means you can’t use it immediately, investing in an IRA may help make the amount grow faster, and we are happy to help you with your options.4.
- Use it for a large upcoming expense. Everyone has projects, home repairs or renovations to complete. Many times, they cost much more than anticipated. Cross your next big project off your to-do list by using your tax refund to pay for it.
- Donate it to your favorite charity. If you are comfortable with your savings, debt and investments, and don’t have a large project you want to complete, use your tax refund to support a cause that is close to your heart. Depending on your tax bracket and whether you will itemize your 2018 taxes, you may also receive a charitable tax deduction. We recommend visiting with a tax professional to determine tax deductibility.
If you have any questions or want help building a budget that includes your tax refund, come see us at Fidelity Bank & Trust. We want to help you grow your future, spend, and save wisely! Member FDIC. Equal Housing Lender.