It’s not always easy to save money throughout the year, especially if you don’t have a lot of cash flow. Tax season is a chance to push yourself into a position to save, freeing up extra funds specifically for important goals in your life. If you expect to receive a tax return this year, make sure you’re using your funds wisely.
No matter how small, a tax refund has the potential to go a long way to improve your overall financial health. Though it’s tempting to spend this on a holiday, special treats, and big splurges, you can also use it to enhance your finances. Unless you plan to use your money to pay your immediate bills, here are the 3 best things to spend your tax return on.
1. Create an Emergency Fund
First, one of the best things to spend your tax return on is an emergency fund. This is a type of financial tool that’s there to help in case you suddenly have an unexpected expense or loss of income. For example, if you lose your job suddenly or you need to repair your car, you don’t have to rely on lines of credit to cover these costs.
Your emergency fund doesn’t have to be anything complicated. It can be as small as a few hundred dollars. Putting all or a portion of your tax return towards your emergency savings is a weight off your shoulders knowing you have a safety net in the future.
Not sure where to put your emergency fund? A good option is a high-yield savings account or something not attached to your typical bank. Your emergency fund should be accessible but not so much so that it becomes a temptation.
2. Pay Your Debt
Another great thing to spend your tax return on is your debt. Whether you’re paying down payday loans, credit cards, or medical debt, every step helps. Though you might not be ready to fully wipe that balance clean with your tax return funds, it can still make a difference. When in doubt, always pay down your highest interest debt first. Over time, this saves you money.
Along with this, take the time to take stock of your debt. Though it’s intimidating to create a budget, it’s always helpful to check in with your overall financial health. From here, you can create a debt payoff strategy that’s right for you. Whether you choose debt snowball, avalanche, or something else altogether, you’re not afraid to take action.
If you’re struggling to pay down your debt, it might be time to talk to a professional. A skilled debt expert can help determine the best way to apply your tax return. Never be afraid to ask for help, especially if it means you’re creating a better tomorrow.
3. Give to Your Future Self
Lastly, there are a lot of unique ways you can give to your future self with your tax return. Looking ahead isn’t always easy, especially financially. The reality is you can never predict for certain what comes next. Still, it’s important to keep an eye on the future. Here are some of the many ways you can give to your future or your family’s future:
- Super: Putting greater money towards your Super or your retirement fund can be a burden off your shoulders. Do you know if you’re on track for your retirement goals?
- College: Whether you’re investing in your education or your child’s, your tax return can also be the perfect seed for your future.
- Bills: We all have bills we are expected to pay regularly. Things like rent, electricity, insurance, and so on all add up. In most cases, it’s possible to pay these bills forward, freeing up this money in the future.
- Home improvements: If you own your home, another option with your tax return is to use these funds for improvements. Spending money on your home can have a lot of financial benefits, whether you upgrade to eco-friendly appliances or increase your home’s value.
- Business: Do you have a business or side hustle? Putting money towards your business goals, whether in terms of education, training, or supplies, could potentially pay off long-term.
Don’t be afraid to use your money proactively for the future. While there are no guarantees, these ideas above are a great way to set yourself up for success no matter what.
Prepare for Tax Return Season
Ultimately, your tax return is an opportunity to start the financial year on the right foot. Though there’s nothing wrong with using some or all of your tax return to treat yourself, this isn’t always the best idea. If you’re feeling inspired to make a positive charge, consider these best things to spend your tax return on listed above.
Tax season is also a reminder to keep your finances in order, no matter your experience level. Luckily, you’re not in this alone. Contact the professional team at Debt Busters today on 1300 368 322 to start your own journey towards financial wellness.