Everyone has a different opinion about tax refunds – should you expect one? Should you adjust your withholding so your money isn’t a free loan to the government? Either way, if you are expecting one this year your favorite Madison credit union shares the best tax refund tips.
Tend to Your Nest Egg
Fatten your retirement fund
Max out contributions to an IRA or other retirement account. If you don’t have one yet, this is the perfect opportunity to get started.
Save smart with a 529 educational savings plan
This tax-advantaged savings account is for many college expenses. Contributions to this account grow tax free and the funds are not taxed upon withdrawal. Most states (including Wisconsin) offer an annual state tax benefit. Check with your financial advisor for details.
Start or add to an emergency fund
Have money in a special savings account to prepare for life’s inevitable curveballs without having to rely on high interest credit cards.
A safe, fixed-income investment that could make a big difference in your (or your beneficiary’s ) future cash flow.
Figure out an amount you wouldn’t mind losing and try your hand at the stock market. This could be a fun way to see how good you are at predicting which stocks will go up and make you more money.
Set up a “fun-money” account
It’s not only a good idea, it’s important to treat yourself. It’s smart to set aside a decent amount for when you feel like splurging so you can avoid credit card purchases.
Build up your HSA (Health Savings Account)
If you have a high deductible health plan (HDHP) you can have an HSA. You’ll save pre-tax money for health insurance deductibles and expenses. Your favorite Madison credit union has an AWESOME rate on HSAs.
Do Something Nice for Yourself
Take a college course
This is an awesome way to invest in your future earning power. Lean a new skill or expand what you already know. Check local and online class options that fit your busy schedule.
Join a CSA in spring to have a steady supply of in-season locally grown and sometimes organic fruits and vegetables.
Join a weight loss plan
It’s so easy to put off and money is one of the top reasons people site for putting it off. Now is a great time to get moving. This is truly for you and no one else. You deserve a healthy future.
Join a gym or take a yoga class
Not only will you feel better with more energy but you’ll also be stronger and healthier. Meeting new like-minded people helps you stay motivated to keep going.
Dig out that bucket list and start planning a dream adventure.
Upgrade your work wardrobe
Who doesn’t feel great when they look great? It’s worth picking up a few new items. Look for something you would typically pass by because of cost.
Donate to your favorite cause
This one is not only helping the cause that melts your heart, but it makes you feel SO good. Even if no one ever knows of your good deed, you do. Need ideas? Your Madison credit union does a LOT in our community.
Take up a new hobby
Have you always wanted to get crafty and make homemade gifts for friends and family? Or maybe collecting vintage bobbleheads is more your thing. Press GO by acquiring a stash of supplies or your first collectables.
A side hustle is everyone’s new second job. It’s a fun way to follow your passion an add to your income. It probably takes an upfront investment to get going. Now is the time.
Take Care of Business
Replace old appliances with energy efficient ones
Out with the old, in with the savings. Often you can save even more with local or federal rebates.
Think about upcoming expenses. Maybe you need a crown, or are throwing your parents an anniversary party. This is a good time to set aside the funds you need before the end of the year, or longer if it’s a particularly large expense.
Improve your home
Stop dreaming and get solar installed or remodeling your kitchen. Whatever home improvement will make your space the way you’ve always wanted it, do it this year.
If you’ve been putting off repairs like new brakes or tires your tax refund is a great way to get these off your list. Or better yet, buy a hybrid or electric vehicle (EV) and rack up the gas savings! Again research rebate and tax incentives.
Plan for summer care
When school isn’t in session you need alternative care. Although necessary, it’s not usually cheap. If you have the money upfront you may be able to save on the cost by not making installment payments.
Increase insurance coverage
It’s smart to review your insurance policies every couple of years. Check auto, home and life policies to see if you’re adequately covered. Your home may have increased in value or your family situation may have changed since you started the policy. In the event of disaster it’s nice to know you’re covered.
Pay Down or Pay Off Debts
This is typically your highest interest rate debt. Get the biggest bang for your buck by paying this off first.
These things seem to take forEVER to pay off. Throwing a chunk of money that way makes it go away that much faster.
Think of how your budget would change by freeing up a few hundred dollars each month. You can save that amount or put it towards paying off another debt even faster.
Pre-pay your mortgage
Make an extra payment or two. It usually goes towards the principle amount of your loan. The amount of interest you save over the life of your mortgage could be thousands.
So many options of what to do with your tax refund this year. Choose wisely and your future self will thank you.