Here are five simple ways you can make your refund last longer (and pay you back):
- Use it to become debt-free. One of the most obvious answers is to pay off or put a large chunk toward a bill like a credit card or student loans. Each month, your interest on these loans build up, causing you to not only pay toward these bills longer but also shoveling out more money than the original amount used by the end. The sooner you can rid yourself of those high-interest debts, the better for your wallet and your future. If you made a resolution to clear yourself of one looming monetary obligation this year, consider looking into a debt consolidation loan or a balance-transfer credit card.
- Create an emergency fund. With the average refund in 2015 ranging around $3,000 and the typical recommendation of an emergency fund being three to six months of expenses, it may be wise to put your full refund into an account that will help you in a serious pickle. Whether it be an unexpected car expense or losing your job, you should always have money aside in case of an emergency.
- Invest in yourself. Of course you should put some, if not all, of your refund into a savings account, but you should first contemplate a high-yield savings account to help increase your interest. Consider Synchrony Bank if you don’t need to access your account very often in a month or Capital One’s 360 program. In addition, if you do put money away, SaveYourRefund wants to reward you for every $50 you reserve, whether it is in a savings account or into a bond. You can manage to save at least $50, right?
- Another clever way you can invest in yourself is to use part of your refund to develop a new hobby or even put it toward that new start-up you’ve been dreaming about all throughout 2015, provided you’ve done your research on starting your own business. Plus, many hobbies can generate a nice side income. Spend some time exploring Etsy if you have a hard time believing this. (Hint: A great hobby may also be learning investment strategies and the stock market.)
- Plan ahead. By beginning a retirement fund now, you are helping yourself create more financial stability when you’re finally ready to say goodbye to the corporate world. Not starting one early is a big mistake many individuals make, and if your employer does not offer a retirement or 401K plan, CNN Money has these tips to grow your retirement fund. Additionally, you can determine how much you should be putting in to one of these accounts using a simple free easy retirement calculator.
- Pay it forward. They say you should invest or save one third of your refund and then use the rest for what you will, but imagine how fulfilling it would be to use the remaining amount to donate to a good cause. If more people used their extra cash to go to charity, picture what that could do for the world. Contributing your time and money to a movement pays you back in more ways than one.
Whatever you decide to do with your tax refund this year, just remember to think about how much farther you can make that check go by following one (or more) of the above points.
Photo: Flickr: Images Money