Wise Ways to Use Your Tax Refund
The average tax refund in 2016 was $2,8571 and the IRS expects the average refund to be similar this year. It would be wise to plan how you use your refund. If you are expecting to get a little extra money back this year, here are some ways to put it toward your financial well-being.
- Payoff your high interest debt - high interest credit cards are the perfect example of debt to chip away at or eliminate from your monthly expenses. If you have a $3,000 balance on a credit card with 18% interest rate and the minimum monthly payment is $60 you would be saving up to $2,587 that you would have paid as interest over 8 years. Calculate your total interest payment. » View other financial calculators »
- Make money saving home upgrades or fixes –pay the upfront cost to fix a leaky pipe that will save you on your water bill. The summer season is here so upgrade to an Energy Star energy efficient air conditioner that could help cut down on your electricity bill. Plus, some Energy Star certified products could qualify for tax credits on your tax return next year.
- Open or add to an emergency fund - if you haven't already done so, open a savings account that yields a higher interest rate to serve as your emergency fund. In case of a natural disaster or medical emergency, you can tap into this savings account set aside from your day to day finances. View FHB savings accounts ».
- Reinvest it back into a college savings or retirement fund - turn your refund into money that works for you. Contribute your tax refund to a 529 college savings or a 401(k) retirement fund and take one step closer toward reaching a long-term goal.
It’s important to remember that this extra money can help to alleviate your financial restraints in the present and help to build a financially stable future. Consult with your personal financial advisor.