By, State Treasurer Kelly Schmidt
The tax season is upon us. Every year, people ask what should I do with my tax refund? First, if you are expecting a tax refund remember that the government is not giving you a bonus, this is money you should have received all year. (you may want to check your withholdings for 2019) Rather than thinking of your tax refund as a bonus consider it as an extra paycheck. Instead of spending it carelessly, plan where this money should go before you spend it on frivolous items.
Here are a few ideas to help you use your refund wisely this year.
- Create an emergency fund
Do you have 3-6 months of your salary built up in a savings account just in case there was an emergency? What if you lost your job, or the furnace went out, would you be able to survive without having to resort to credit cards? Using your tax refund to build up a safety net is incredibly money savvy.
- Pay off debt
Do you have a credit card that could be paid off? Instead of putting money in savings, pay off that credit card with the high- interest rate. It will save you more money in the long run when you are not paying interest or making a payment each month.
Are you close to retirement, have you maxed out your Roth contributions? By contributing to your retirement, you are contributing to your future self.
- Make an extra mortgage payment
This is a great way to save money over the long term. If you can make a payment to the principal, it will reduce your interest which can have great long-term benefits.
- Start a side business
There are many side businesses to choose from and having more than one source of income can be beneficial for long term financial stability.
Whatever your tax refund is put your money to work for YOU! What better way to invest
than to yourself.