Last year, when the Covid-19 pandemic ran rampant in the country, tax refunds were a much-needed relief to many Americans. But has been different so far. We hope that this year will give us the breathing space to plan to make the most of tax refunds.
Recent surveys show that many people have already begun planning what to do with their tax refunds. Many people are foreseeing larger refunds and are also convinced that they will receive deductions and credits they are entitled to. What can you do with your refunds?
Pay down debt
You can consider setting aside tax refunds to pay down debt. Surveys show that young people are more likely to use refunds to pay their debts and get closer to their financial goals.
But this is a recent development. Experts believe that the Covid-19 pandemic stunned the country and has made us wake up from a complacent mindset regarding finances.
Save
If you don’t have any debt, you can consider saving the refund in a high-yield saving account and expect some returns. Suppose you don’t need the money any time now and have enough savings to cover an emergency expense. In that case, you can consider certificates of deposit (CDs).
Invest
Build wealth for the future by utilizing tax refunds to diversify your investment portfolio. Most youngsters know the importance of investing but fail to diversify and restrain unwise spending that leads to long-term debt.
Pay bills
This could be an opportunity to pay off any outstanding bills you might have.
Treat yourself
If you’re usually on a limited budget, you can make most of the tax refunds to enjoy. You can use this surplus amount of money to indulge in an extra meal or a visit to the amusement park or travel.
Donate
It’s been a challenging year for many of us because of the covid-19 pandemic. Keeping that in mind, some people donate the refunds to charity or issues they deeply care about. You can transfer part of the funds to people who had a big blow during this season.
Plan to use the refunds
Instead of using your refunds to cover regular day-to-day expenses, consider using them to reach your long-term financial goals. Spend wisely. Save wisely. Invest wisely. Read more on how to refresh your finances this Spring.
If you haven’t filed your taxes yet, file with Beem. File all forms and all filing statuses with $10,000 IRS penalty protection. Check out Beem Tax Calculator to get a quick and accurate estimate of your federal and state tax refund.
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