Taxes were due on the 18th of April this year and a lot of returns have already arrived or will be arriving soon! Last year the IRS returned a total of $124.670 billion and the average return was $3,120*. This is a lot of money and could help your financial situation if used in the best way possible!
If you have already gotten your tax return or if you are still waiting for it, here are some tips on how to make the most of your extra cash.
Pay Down Your Debt– Getting an extra check can be very enticing. Don’t let it burn a hole in your pocket! Use it in a way that can benefit your financial situation. When you have this extra money you may be tempted to splurge and spend it on a vacation or a new camera. Make a plan to use these funds to pay down debt! The sooner you pay down your debt, the less interest that you will have to pay over time. We suggest paying down the debt with the highest interest rate, or the debt with the longest term. You can calculate how much you will spend if you take each debt full term and see what would be most beneficial for you to pay off early.
Start an Emergency Fund– Having an emergency fund is a great way to ensure financial stability. If you are living check to check, any sort of financial emergency can throw everything off. Being prepared means having enough funds to get you by if an unexpected medical expense arises or if you get laid off. Learn more about making an emergency fund here! Use your tax return money to start your emergency fund.
Start Your Retirement Fund– If you haven’t started saving to prepare for your retirement, a great way to get the ball rolling is with your tax return. Set it aside and start saving! Learn more about what you can do to build your retirement fund here.