If you’re receiving a tax refund this year, you might be tempted to spend it on new clothes, a big flat-screen TV or smartphone or some other consumer technology that may not really be a necessity. Instead, being financially responsible about how you spend your refund now will help you develop strong financial habits in the future.
One way to use your tax refund is to apply the 30-40-30 plan. With this plan, you would designate 30 percent of your refund to paying off debt and catching up on outstanding bills, another 40 percent for current use and the last 30 percent to start or add to an emergency fund or longer-term savings plan.
Here are other tips for using your tax refund wisely:
- Create a monthly spending plan and write down how you will spend your tax refund throughout the year. If you divide the amount of money in your tax refund over 12 months, it won’t be as easy to splurge or spend your refund too quickly.
- Start a special occasion or holiday fund so you’ll have money saved for birthdays, anniversaries, holidays and special events.
- Consider donation money to a local food pantry or shelter. Not only will you will be helping your community, you could give yourself a tax write-off for the next year.
Making wise decisions on how you’ll spend your tax refund now will save you from potential financial headaches later. These steps will not only help you at tax season, but throughout the year.
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You can open a savings account
at Travis Credit Union online today! It only takes $5 to open an account and become a member of not just a financial institution, but a credit union that gives back to the community.
Visit traviscu.org/savings for more information.