It’s that time of year when many of us will be receiving a tax return from the IRS (hopefully). But, the reality is that many of us don’t use that refund responsibly and we squander it away in a short period of time.
Don’t worry, you can still be excited and dance a little while holding that check in your hands, but once the excitement wears off, begin to change your carefree spending habits and start being responsible with your tax refund money.
First you need to prioritize your financial goals. Then, decide which of these responsible refund options are most important.
Saving your tax return money will give you much more satisfaction in the long run than spending it all on a new 60” flat screen TV to replace that 55” TV that you already have. Here are responsible ways to save:
A) Build Your Emergency Fund
The ideal emergency fund covers at least 3 month’s worth of expenses. But if you’re just starting your emergency fund, try starting out with $1,000.
B) Let Money Grow in a Share Certificate
Another way to save with your refund could be to put it in a share certificate. This is where your money earns interest, which results in more money for you just by letting it sit there and grow!
Putting a large amount of your refund toward other higher balances can help alleviate some of the existing debt that’s weighing on you. Also, consider paying off debt with the highest interest rate first.
Have you been interested in getting a new car but have held back? Now is your chance to take that refund and use it as a down payment on an auto loan.
Getting a secured credit card is a great option to help build credit. Getting a credit card can be a bit scary, but it’s easier when you secure the card. It works like this: Say you want to get a $500 limit on a credit card; you use the $500 you “saved” as a security deposit for the card while still being able to use a credit card to make purchases. As long as you make your monthly payments and use the card responsibly, it can help build your credit score!
Having a pre-paid debit card is a good alternative to carrying around cash or having to stop by an ATM often. Putting portions of your refund on a pre-paid debit card can make life much easier.
You can spend your tax refund responsibly while still having some fun! Set a small portion of your return aside and use it on the most important person, YOU! Treat yourself to something you don’t normally get to do or have, like: extra Starbucks trips, a spa day, get a few tickets to see your favorite sports team, a night on the town, or even trip to a destination you’ve been wanting to travel to!
If you think that any of these tips sound like something that you want or need to do, then CSE Federal Credit Union is here to help! Stop in or call us at 330.452.9801 and any of our credit union professionals can help you get started down the right financial path! Now that you have these tips, you can be in control and enjoy your tax refund responsibly!