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How To Maximize Your Tax Refund
How to Maximize Your Tax Refund
by Laura Gariepy | Apr 15, 2019
If you have a tax refund on the way (or sitting in the bank), make a plan for that cash. Depending on the amount of your windfall, your brain may be running wild with possibilities. To prevent blowing your cash on impulse spending, Charlie can help you come up with a strategy that will ultimately make you happy and improve your life.
Tip: Don’t have your refund yet? Track it here.
There are two main things you can do with your refund: spend it or save it. But you have many options under each umbrella.
Spend Your Tax Refund
Pay off high-interest debt: Carrying this debt makes it harder to tackle other goals and can take years to get rid of when you’re just making the minimum payments.
Expand your horizons: Consider taking a course, attending a conference, or starting a business to develop new skills and increase your earning power.
Give your home or car some TLC: Maybe it’s time to replace those practically bald tires. Or perhaps you can finally swap out that hideous linoleum in your kitchen for some gorgeous tile.
Buy an umbrella insurance policy: If you’ve got a lot of assets, it could make sense to add an extra layer of insurance protection.
Give to your favorite charity: It will feel great to help a cause that’s near and dear to you. Plus, you may be able to deduct the donation from next year’s taxes.
Make memories: Use your refund to buy plane tickets for a dream vacation, plan a couple of day trips, or attend extra social events throughout the year.
Go shopping: If you’ve been drooling over the latest gadget or new outfit, now’s the time to go for it. You can splurge without impacting your regular budget or taking on additional debt.
Tip: No matter what you decide to spend your refund on, be sure to shop around for the best deals. Your hard-earned dollars will stretch much further.
Save Your Tax Refund
Pad your emergency fund: Having a cushion in the bank will help keep those credit card balances low and your sanity level high.
Prepare for known expenses: Set money aside now for upcoming events like a family vacation, your friend’s wedding, a home down payment, or next semester’s tuition bill.
Invest it. Depending on your situation, it could make sense to put the funds into an IRA, an HSA, or a brokerage account.
Tip: Did you know that Charlie can help you track your savings goals? Just say, “Goals,” or, “Budget.”
Extra Tip: Be sure your emergency fund and other savings accounts are working hard for you by stashing your money where it will earn some interest.
When money comes in the door, pause for a moment and assess your goals before making any financial decisions. While there’s no right or wrong way to use your tax refund, you should spread out the cash in a way that does the most good for your specific situation.
Final Tip: If money is tight throughout the year and you got a refund, consider adjusting your withholding (w4 form) with your HR department.
Tell Charlie: What’s the best thing you’ve ever done with a tax refund?
Please note: We don’t have an affiliation with or personally endorse any of the services linked to in this post. We’re just trying to give you some ideas.
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This quaint ranch found in Parker is a great starter home or a home for someone who needs a lot of storage space or workshops at a price below $400,000. The home is well maintained with beautiful