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Posted by Tiffany Gaskin

Proven Ways to Make the Best of Your Tax Refund

Proven Ways to Make the Best of Your Tax Refund

If you are expecting a tax refund, consider using it to reinforce your account balance. Some people are looking for ways to pay not more than they owe, and some seek means to boost their tax refunds. 

The tax refund is gotten within three weeks of filing returns. The average refund is $3000, and that’s a significant amount of money. 

Irrespective of how it is spent, a tax refund stands for the benefits of enhancing your financial standing. 

There are tried-and-true strategies you can incorporate to make the best of your money. Reportedly, 43 percent of Americans plan to make the best use of the money they get from Uncle Sam. Some plan to pay down debt, and very few said they would use it for vacation. So if you’ve been planning to blow the dough on a night, you should have a rethink.

 

Proven Ways To Make Best Use of Your Tax Refund

Here are some of the tips you can use to put your tax refund into good use:

  1. Save For Emergency

According to a report by Bankrate, nearly a quarter of all Americans do not save up for emergencies. But it is recommended to have at least six-month saved up funds to cover emergencies like a car repair or hospital bills. 

  1. Grow Your Super Savings

Reach out to your superannuation fund advisor to learn how to transfer your tax refund into a super fund. Your future self will always be grateful to you. 

ASFA estimates that a single person needs an average of $545,000 at retirement age to live a comfortable life. Now is the time to start growing your super savings. 

  1. Pay Off Debts or Loans

This is not exciting as it sounds, but you should consider knocking off a chunk of loan or debt with your tax refund. Financial advisors recommend paying off debt before sorting other loans. 

Interest repayment reduces as soon as the outstanding balance is cleared. You can start using your money for yourself after your debts have been settled. 

  1. Save For Your Children

You can save your refund in a long-term deposit or interest-earning investment so you can use it later for your children's education or significant future expenses. You can cater to their expenses without a brutal hit to your wallet this way. 

  1. Purchase Work-Related Equipment

Using your tax could be an excellent option if you plan to purchase any extensive work-related equipment like tools or computers. 

Purchasing items that cost over $300 early in the year means a more significant deduction on your subsequent tax. If you buy any of these items at the end of a financial year, your next tax return will come with little benefit.

  1. Put Into A Mortgage Offset Account 

A mortgage offset account could be likened to a savings account. You can explore the mortgage offset option provided by your bank or mortgage provider. 

Your offset balance is dedicated to your mortgage loan when you put your tax refund into a mortgage offset account. You will be charged less interest and pay your mortgage loan off quicker. 

  1. Splurge!

It is okay to splurge, but in moderation. Avoid blowing all your money in one night. Treat yourself to some nice indulgence or a trip, and it might even be the break you need.

 

Conclusion

Your yearly tax refund could be a good time to eliminate debt, purchase work equipment, or save. You stand a chance of retiring earlier if you keep your tax refund earlier. 

Before you consider splurging in a shop nearby, reflect on how much impact your tax refund can make in your life. If you are stuck on deciding what to do with the money, consider any clever ideas in this article. 


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Tiffany Gaskin
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