Financially Responsible Uses For Your Tax Refund

If you received a tax refund, here is a list of eight financially responsible ways to put it to use. 

1. Build or boost your emergency fund:
Having a strong emergency fund is a crucial part of your financial health and stability. If you don’t have a fund with three to six months’ worth of living expenses set aside to cover unexpected events, work on setting one up now. Use some of your tax refund to start building your emergency fund or boost an existing one. 

2. Grow your money with interest-earning accounts:
This is a great opportunity to make your money work for you. Consider placing a portion of your refund into a higher interest-earning account, such as one of our Share Certificates or Money Market Accounts. These options can help your money grow over time while keeping your funds secure and accessible based on your financial goals.

3. Invest in your retirement:
If eligible, consider allocating a portion of your tax refund to your employer-sponsored 401(k) or an IRA. The earlier you start investing for retirement, the more you can potentially accumulate for your golden years.

4. Pay down high-interest debt:
High-interest debt can kill the best of budgets. If you’re carrying outstanding debt with high interest, consider using some of your tax refund to pay it down. 

5. Invest in your professional advancement:
If you’ve been looking for a way to advance your career and increase your earning potential, this may be your chance. Consider furthering your professional education by allocating some of your tax refund to career workshops, conferences, or additional certifications.

6. Prepay your mortgage:
Making an extra mortgage payment or two can be a great way to free up some money for the long term. Reducing the principal can have an exponential effect on your loan since so much of it goes towards interest over the life of the loan. 

7. Make home improvements:
Spending some, or even all, your tax refund on improvements that increases the value of your home is an investment in your equity. Similarly, using some of these funds to increase your home’s energy efficiency can pay off for years to come.

8. Start or contribute to a college fund:
If you have children or plan to start a family in the future, consider allocating a portion of your tax refund to a college savings fund, such as a 529 savings plan. Contributions to a 529 plan may be deductible on your state taxes, and earnings are tax-free when used for qualified education expenses.

Use our list for some financially responsible ways to use your tax refund.