With tax season upon us, it’s important to plan the use of tax refunds. Be careful not think of the refund as “extra” income because it is essentially your own money that is being returned. If you’re in a position where you’re receiving a large return, say over $1000, or end up owing on your taxes, you may want to speak with a tax professional about adjusting withholdings to retain control of your money.
Follow the tips below to help make the most of your refund:
- Establish an emergency fund: Try to have anywhere between 2-6 months of living expenses saved. This can help to put your mind at ease and provide a safety net for when those unexpected expenses, such as home or auto repair, come along.
- Pay off debt: If you already have an emergency fund established, work on paying any debt that you have, starting with the highest interest accounts first. Getting out from underneath burdensome credit card debt can put you on a path toward financial freedom. If you need help figuring out a plan or want to explore repayment options, a Clearpoint Credit Counselor would be happy to help! Contact us at 800-750-2227 to schedule an appointment.
- And lastly, save for retirement: The earlier you can start the better! Think long term and use your tax return to start or build up retirement accounts.