If you’re looking for ways to use your tax refund beyond the typical, we’ve compiled a list just for you.
For many, tax season is a much-anticipated time of the year, because it also means tax refunds. However, COVID-19 likely has you thinking differently about how you’ll use that money. Whether you realized the importance of saving, or you’re looking for a way to grow your money, you may realize there are more efficient ways to use your tax refund.
Boost Your Savings
While saving is probably the least exciting option on this list, it’s one of the more practical ones. Having liquid savings (i.e.–savings you can easily access) is always important. A savings account can help you pay for emergencies like car repairs, job loss, or even household catastrophes. Savings can also be great for opportunities too—like a trip, and investment opportunity, or something you want to do that you might not otherwise have the cash for.
By not spending your refund, you can reduce the likelihood of getting overwhelmed if the unexpected happens.
Pay Off Some Debt
Chances are, you may have some debt. Putting some, or all, of your refund towards that debt could save you hundreds of dollars in interest payments in the long run. While there are many types of debts, we recommend looking first toward credit card debt, which is pure cost. On top of saving some interest, you’ll free your card up for unforeseen expenses.
Contribute to Your Retirement
If you have a retirement account that you’re regularly contributing to, why not add your tax refund? You might not get that instant gratification, however you’ll get to enjoy it later in life. If you have not yet opened a retirement account, you can use your refund as the starting point, by opening an IRA.
Fund an Investment
While the stock market can be unpredictable and volatile, it can also offer good returns in the long run. If you’ve yet to invest, your tax refund can be a great way to start, as it’s not coming directly from your paycheck. Even using a part of your refund can be a good way to get your foot in the door.
Invest in Yourself
Are you a budding entrepreneur, or potential small business owner? The internet has made entrepreneurship more accessible than ever. If you’ve been sitting on an idea, your refund could give you the boost you’ve been looking for to get started. The options are endless—you can buy supplies, new equipment, or even pay for a certification that will set you on the right path.
If you’re happy where you are investing in your skills can help you climb the ladder at your current position too. Consider what skills your colleagues have that have earned them promotions, or look at what could set you apart. Then find a way to put yourself on the map. Websites like Udemy and Coursera are popular online platforms for earning certifications.
Fix Up Your House
Not only is your refund a great way to offset the costs of any renovations you’ve been thinking about—it can actually save you money in the long run, too. Modern renovations like updated windows or appliances can actually reduce your energy bill, giving you a little extra cash flow each month.
While most would advise against frivolous purchases with your tax refund, it’s been a tough year. Sometimes, it’s worth investing in self-care. You don’t have to spend your whole refund to make a positive impact on your mental health. It could be as simple as setting aside a small amount to go get a nice meal, and saving the rest. This could also mean replacing a beloved but worn out item in your house, that you know will get lots of use. While there are plenty of things you can do to make your refund work harder, it’s also valid to enjoy some of that money too.
How Will You Spend Your Refund in 2021?
Regardless of how you choose to spend your tax refund this year, it’s important you have a plan. Otherwise, that money can disappear in the blink of an eye—it happens to the best of us. With a plan, you’ll be prepared the moment you have that money hits your bank account, and you’ll likely feel more satisfied. So how will you use your refund?
If you’re urgently looking for loan options, please contact the Jora team. We will be happy to help!