5 Quick Tax Refund Tips
Is your bank account about to get a big boost from a tax refund? If so, here are five quick tips to help you make the most of it.
- Have (a little) fun! It’s ok to have some fun with your refund. It’s just not usually a good idea have fun with all of it. Instead, pick a percentage – maybe 10-15% of your refund – to use for fun, and then be responsible with the rest.
- Pump up you emergency fund. Keeping the recommended three to six months' worth of your committed expenses in a separate emergency fund can be hard to do. If your balance is a little light, your tax refund might just be the perfect way to pump it back up.
- Clean up credit cards. Credit card debt can be a real financial and emotional drag. If you’re carrying balances on your cards, use your tax refund to clean things up.
- Prepare for big expenses. Set aside pools of cash specifically earmarked for this year’s upcoming big expenses like vacations, car or home repairs and the holidays. This way, your cash flow won't be as stretched when the time arrives.
- Jump-start savings. Been meaning to start saving for something? Dropping a lump sum into your account can get you over the initial hurdle of getting started.
The average income tax refund in 2015 was around $2,700 and 2016 will probably be similar. If you’re part of the refund crowd, these tips can help you get the biggest bang for your refund buck.