Many Americans are happy to know that their tax refund money is about to hit their bank accounts. It’s your money and you earned it. But as fast as it arrives, it can quickly be depleted. Because the economy is on a downward spiral, now is not the best time to go on a shopping spree.
Whether you need it desperately to pay for groceries or to simply splurge on something fun for yourself, it’s wise to think twice about how it should be spent. Here are 5 ways to make your tax refund dollars work to your advantage.
Pay down past-due bills. If you’ve been affected by a layoff or monetary setback due to the pandemic, chances are you may have made a late payment or two. The main benefit of utilizing a tax refund is to get out of a financial hole and back on track with your monthly obligations. Get caught up on payments and pay down high balances on all of your bills if you can.
Invest in penny stocks. Newer up-and-coming companies often sell their shares under a $1. This is enticing because it gives you the chance to invest a small amount of cash into these businesses. The result? The possibility of a generous return and a great way to get your feet into investing. The main caveat to consider is that these micro-cap companies may lack liquidity and they may not be as financially stable as others. Investing is always a risk, so using tax money is a more attractive option.
Start a life insurance policy. One thing COVID has taught everyone is that life is unpredictable. Not only from an economic perspective, but health-wise too. Do you have loved ones who depend on your income? Now is the best time to think about your legacy and what you will leave behind for your family after you pass away. If you don’t have a life insurance policy in place, now is the time to set one up. Some can be started with just a few bucks and offer a good return at an affordable monthly payment.
Add to your emergency fund. Job closures, layoffs and unemployment are at an all-time high. So money for daily survival is a top priority. Keeping up with your emergency fund is vital. Whether you have funds set aside or not, using your refund check to stash cash away is a great way to build a security cushion. Start with $1,000 and build it up from there. Shoot for around three months of your average monthly income.
Do some home improvements. If you own a home and have all your debts in check, put your tax refund to good use by investing in your property. Spruce things up around the house by doing a small home improvement project or two. It enhances your lifestyle and also boosts the value of your home.
Whether you plan on indulging with a new wardrobe or need to put food in the fridge, your tax refund is designed to help. Being creative about that newfound money in your checking account can go beyond temporary and reshape your future for the better.
Here’s to Saving and Thriving Daily!
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