There’s nothing wrong with using your tax refund for a little splurge, but the reality is many Americans plan to save their tax refund. In fact, a National Retail Federation survey found that 47 percent of people expecting a refund were stashing it in their savings. If you’re ready to put your tax refund to work, here are some smart ways to save your refund check this season.
If you haven’t filed your taxes yet, don’t panic! For a limited time only you can save up to $25 on your tax return when you file by March 17 with Turbo Tax!
1. Invest in your home
Some home upgrades can actually save you money in the long run. Replace an old appliance like your washer or refrigerator with an Energy Star model. You’ll see your energy bills go down and get a new household toy at the same time! If you plan to sell your home in the future, replacing a front door, adding solar panels, or sprucing up the landscaping can be worthwhile investments.
Not sure if an appliance upgrade is right for you? Here’s how you can save money right now with the appliances you already have!
2. Pay off your credit cards
If you feel like you’re sinking in debt, then use your refund to dig out. You may want to pay off the higher interest debt first since these accounts can do the most damage. If you have rewards points, it may be a good time to cash those out toward your debt as well.
Just because you’re paying off credit card debt doesn’t mean you have to give up everything. Check out our survivor’s guide to paying off credit cards for great tips on how to realistically and easily pay off that debt!
3. Make an extra mortgage payment
Putting an additional $100 per month toward your mortgage can shave thousands of dollars as well as months, even years off the life of your loan. Use the Additional Payment Calculator from Bankrate to determine how much it could save you in the long run.
4. Put it toward retirement
If you put all of that refund into an IRA account, just imagine what it could be worth when you turn 65! Use an IRA calculator to see how much your refund could earn you if you wait ’til retirement to spend it.
5. Start saving for college
Put it into a 529 plan and start saving for your child’s college. Plus, 529 plans typically offer tax advantages, so you’re setting yourself up for a good tax year. A pre-paid 529 tuition plan will lock in your tuition price (at certain schools) at the current rate. So if you bought a half year’s worth of tuition, it will still be worth half a year even if prices skyrocket by the time your child heads to college.
6. Beef up your emergency fund
It’s recommended that you have an emergency fund that will cover at least six months worth of expenses. But if you can’t save that much, that’s OK. Having something is better than nothing. Use your refund to start an emergency fund or replenish an existing one. Keep it in a separate account so you won’t be tempted to touch it, but make sure you can easily access it without paying a fee.