Every year, people look forward to getting their tax refund. Having extra money in your pocket is never a bad thing. Of course, it is easy to want to take that refund and go on a vacation or a shopping spree, but it is important to consider using your refund responsibly.
One thing to consider doing with your refund is to put it directly into an emergency savings fund. Most Americans don’t have a very well-funded emergency account and find themselves struggling to make payments on unexpected costs that may arise over the month. It is recommended to have between three and six months of living expenses saved in an emergency fund. This can be crucial if a member of the household that brings in income loses a job or has unexpected medical expenses.
Another good idea is to try paying off some of your debt. It is important to try and pay your credit card bills in full each month and not carry a balance. Of course, there are just some months where paying your bill in full can be impossible. A tax refund can be the perfect form of financial relief when you need help paying some of your bills.
A few other ways to put a tax refund to good use include starting a retirement fund, starting a 529 plan to begin your child’s college savings, investing it, or starting a fund for a big expense you know is in your future. If you need help with any financial matters, contact Werdann DeVito LLC today.