If you're one of the lucky Americans who receives an income tax return, you're probably reeling with excitement! Tax season is upon us and that sweet cash will soon be in your pocket and ready to spend.
But maybe you want to do things differently this year. Instead of buying a new TV or going on a mini-vacation with the money, maybe you want to spend it more wisely.
Now that's smart thinking. Here are six great ways you can spend your 2020 income tax return!
1. Create Your Emergency Fund
Saving money is undoubtedly one of the wisest financial decisions you can make — aside from going back in time and investing in Google, of course. But even if you don't have a healthy savings account in place, you can easily get one started immediately with your 2020 tax refund.
But this first step towards savings isn't just about gaining interest and preparing for retirement. An emergency fund is about preparing for the near future and anything it might throw your way. Sure, you might not experience the thrill of shopping with that money, but the peace of mind of knowing you have an emergency fund to cover any unforeseen circumstances can't be beaten.
2. Pay Down Your Debt
Whether you have credit card bills, a car payment, or even a personal loan, taking advantage of your income tax return and paying down your debt is an incredibly smart financial decision.
Some individuals receive considerably large tax refunds that can wipe out a whole mountain of debt all at once. Others may only receive a small amount, but any money paid toward eliminating your debt means you will be that much closer to financial freedom.
This is not only one of the smartest ways to spend your tax refund, but also a smart idea to improve your credit. When you make payments on your debt, it shows lenders you have the means to pay back what you borrow.
3. Cut It in Half
Don't have any debt to worry about? Already have an emergency fund in place?
Maybe you feel like spending your 2020 income tax refund on yourself. And if the above applies to you, you probably deserve it!
Still, you should consider what using half of that money wisely could mean for you. By putting half of it in savings or toward a smart investment, you can feel even better about spending the rest however you choose!
4. Invest in Your Future
As we detailed in a recent blog post, becoming an investor in the stock market can be a superb option for growing your personal wealth. If you are already financially secure enough to not have to worry about your monthly bills, pouring your excess into investments can pay off in amazing ways.
That is exactly why choosing to use your tax refund to invest in the stock market can be a great choice for your future. Whether you find a specific company to invest in or simply go the mutual fund route, educating yourself and making wise investments is almost always as smart as a simple savings account.
5. Start a Retirement Fund
One of the best ways to spend your tax refund is to invest in your future. While many companies offer their employees retirement benefits, quite a few also have cut back on matching funds over the years, and pensions are almost unheard of anymore. Look out for your golden years by opening a retirement fund that you can contribute to regularly. Use your tax fund as the initial payment.
You can put away just a few dollars a month and still see benefits. Any amount you save will grow significantly by the time you reach retirement age. Even if you can only manage $10 per week, that can turn into a nice nest egg when you make deposits consistently. Plus, some retirement savings plans earn you tax credits in the future. You won't find better advice on how to spend a tax refund.
6. Pay for Education
If you want to increase your earning power in the next few years, you have to invest in yourself. Use your tax refund to pay for an education that will benefit you in your career. It's an investment that will pay off over the long term.
Now that you have some ideas for how to allocate your tax refund, you can start planning. Need more cash fast? Apply for a loan with Atlas Credit online, or visit one of our locations throughout Oklahoma and Texas. For more excellent financial advice, check back next week to read more from the experts at Atlas Credit!