It’s tax return time! For some, that may mean paying down credit cards, while for others, it means putting it towards savings. No matter what you choose, you will want to ensure you’ve considered your options before making a final decision. Here’s a look at four ways to use your tax return!
1: Pay Off Your Debt
Having high-interest credit cards or loans can prohibit you from saving for the future. Using a tax return to pay down your debt may help you get caught up, according to Forbes. However, be sure to focus on loans bearing the highest interest rate — if you are currently on track with your payments, and the loan has a low interest rate, it may make more sense to allocate the money elsewhere.
2: Save For A Rainy Day
Even if you already have funds in a savings account, will it be enough if an emergency arises? You should have an emergency fund equal to at least three months’ worth of expenses saved, just in case, says The Balance. If you find that you’re behind on savings, consider depositing your tax return into your savings account.
3: Save For Your Child’s Future
Another way to put your tax refund to work is to start saving for your child’s education, or even your own. A 529 savings plan may be a good place to start, says U.S. News. You will have a few different options to consider, as you can typically choose between a a prepaid tuition plan or an education savings plan, according to the U.S. Securities and Exchange Commission — and both plans may offer you some tax benefits.
4: Invest In a Vehicle
If you need a new vehicle, it may be smart for you to use your tax return money as a down payment. This will lower the monthly payments of the vehicle significantly. It would also save you more money to purchases a gently used vehicle rather than buying a new one. Here at Drive Casa, we have a wide selection of great quality cars! To browse them, please visit our website.
Choosing how to spend your tax refund can be an important part of planning for your financial future. By considering and researching your options, you can choose how to put your refund to use in ways that work best for your lifestyle! How do you plan on using your tax refund? Tell us in the comments below!
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