Savvy Ways to Use a Tax Refund

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Tax season is upon us! Are you expecting a refund? How are you going to spend the cash that Uncle Sam gives back? If you are trying to determine the best approach, we’ve compiled a list that might help you get started…

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.

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.

Invest in Your Education – 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.

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.

Make Home Improvements – Spending some, or even all, your tax refund on improvements that increase 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.

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.

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.

Questions? Want more information on Freedom? Contact your personal Freedom Federal Credit Union representative, Lisa Snodgrass at lsnodgrass@freedomfcu.org or call 410-612-2123!

About Freedom Federal Credit Union

Freedom Federal Credit Union is proud to be your financial partner. Freedom serves and is open to anyone who lives, works, worships, attends school, volunteers, or has family in Harford or Baltimore County, MD. As a credit union, we are committed to putting you first, not shareholders, and helping you achieve your financial goals.

Learn more at freedomfcu.org or call 410-612-2123 to see how we can help.

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