So You Got Your Tax Refund - Now What?

Posted on April 15th, 2024

It’s that time of the year again – the dreaded tax season. While nerve-racking for many people, it can be especially stressful for younger people new to the process of filing their own taxes. Not only can it be a challenge preparing your tax return, but it can sometimes be more challenging to figure out the best way to use the potential refund. Below are a few ideas on how you can use that refund – several of which can help you over the long run

Retirement Funding

Although it can seem like it’s still a long time away, it never hurts to start planning for your retirement and making sure that you’re able to live comfortably once you’re no longer working. Even if it’s not the full amount of your refund, putting some of the money away will certainly be helpful in the long run. If you’re interested in adding your refund into your retirement plan, consider utilizing a Roth or Traditional Individual Retirement Account (IRA)

Planning for the Future

Aside from planning for your retirement, you might be a young couple planning a wedding, or newlyweds looking to save up for a down payment on a house. You might even be planning to start your family.

It’s never a bad idea to put some of that refund money into your shared wedding fund, or save for the down payment on your future home. Maybe you’re even a bit farther down in your journey and are ready to start saving for your children’s college funds. Your refund is a great opportunity to add to those savings and help reach your goals.

Take Care of that Credit Card

This option can be a little tricky, but is beneficial when done with the right caution. While using your refund to pay off your credit card can be beneficial if you have a high balance, it’s important to make sure that you’re not racking up a big bill again once it’s paid off. Proper planning and discipline is needed when using your refund to pay your credit card bill. Consider using a portion of the money on one of the other options listed, before using the rest to pay off your credit card.

Utilize a Savings Account

Another idea for your refund check is to put it into a savings account. By putting the money into a savings account not only are you making it less likely that you’ll spend it, but the interest on the account will make the amount grow. Maybe you already have an account opened to save for a trip you’ve been wanting to take, or for a down payment on a car. You can even utilize the account as a “rainy day” fund for emergencies like car accidents or flooding after a storm. Putting some or all of your refund into a savings account is a great idea that can always come in handy when you need it.

Tax season can be, well, taxing on many people – but it doesn’t have to be. There are lots of options and resources available to make tax season more productive for you and less stressful!