Tax season is finally over. If you received a tax refund, think twice about how you spend it. Instead of spending it all during a shopping spree, be a savvy consumer and consider investing or saving your fresh pile of cash. Check out these smart financial tips to make the best out of your tax refund.
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Pay Down or Pay Off Debt
First, pay off as much debt as you can. Don’t succumb to tax season sales by going on a shopping spree. Instead, work on reducing or completely paying off your high interest credit cards. You’ll end up saving more in the long run as paying down your balance means you’ll be charged less interest. You can avoid future finance charges simply by applying your tax refund to current debt.
Start a Rainy Day Fund
So you have no accumulated debt. Well, don’t start splurging just yet. For all of life’s unexpected moments, think about starting an emergency savings fund. In case of an unforeseeable event, like being laid off or falling ill, don’t rely on loans or high interest credit cards. With your own emergency fund, you’ll have a backup that won’t affect your financial standing. You’ll want to set aside an amount equal to three months of salary in case of a serious emergency.
Save for Future Financial Investments
If you’re debt-free and have a hefty emergency fund, look into further investment opportunities or savings options. Whether you’re looking to buy real estate or save for your child’s college tuition, setting aside lump sums of money when it becomes available to you is always a good option.
If you’re looking to be a homeowner, now is the time to take advantage of the housing market, or if you’re already a homeowner, early mortgage pay-off is a viable option to reduce future interest charges. With college tuitions rising, setting up a college savings account for your kids is a smart move. There are various options for college savings funds that can help you accelerate your savings.
Save for Retirement
Got all of your debt paid off and have a well-rounded savings account? Then give yourself a pat on the back and consider saving for retirement. Compared to most, you’re ahead of the game. Put money into or set up a Traditional or ROTH IRA. Even if you already have an employer-sponsored retirement account, you can take this opportunity to invest in an IRA to further strengthen your financial standing.
Speak with a Financial Specialist
With the vast variety of investment and savings options available, it is sometimes best to seek professional guidance. At Valley Federal credit Union, we can help you make wise investment choices for your future. Simply schedule an appointment with one of our financial advisors at any one of our branch locations.
