The IRS has extended the filing date for your 2019 return to July 15, 2020. For many, filing your tax return also means receiving a tax refund. With the rescheduled Tax Day approaching, here are a few ways you can make the most out of your tax refund.
1. Pay off debt
Paying off debt, specifically credit card debt, is one of the most effective ways to spend that extra money. Many personal finance experts advise using extra funds to pay down the balance of cards with the highest APR first in order to see the greatest financial benefit.
Another effective way of paying down debt is to use Dave Ramsey’s “debt snowball” method of lining up your debts from smallest to largest and paying off your smallest debts first. Many find this technique creates momentum for faster debt elimination as it allows you to see immediate results by paying off your smallest balances first. For those who like to mark things off lists, this technique is especially satisfying.
2. Save for a vacation or a fun experience
Ready to start planning that next trip after months of staying inside? Research shows that people are happier and gain greater long-term enjoyment from spending money on experiences rather than things. The study specifically found that people had a longer positive impact from spending money on experiencing new things, focusing on their physical and mental health and wellness, and increasing their knowledge base through learning opportunities. If you’re interested in staying closer to home, consider enrolling in an online class to learn a new skill or hobby or support local businesses by taking a “staycation.”
3. Tackle a home project
Do you have something in your home in need of repair something, like water damage indoors or wear and tear on your roof? Do you sit on your patio and dream of a beautiful garden? Put your tax return to work and tackle that home project you’ve been thinking about. Your home can be your most valuable personal asset, and it’s a good idea to keep it that way. Money spent now saves you more in the long run. These improvements can sometimes even create additional equity in your home!
4. Pay it forward
A great way to spend your tax refund is using that money to help others in need. Research charities or organizations that support causes you are passionate about. Find out if these entities take monetary donations or supplies. Picking out a cause to support or going shopping together for supplies to donate can be great family activity.
5. Boost your emergency savings fund
If you don’t already have an emergency savings account, now is a great time to start saving for a rainy day. If you already have an emergency savings in place, consider building up to your next landmark goal. The ideal emergency savings goal varies by each person’s situation. Depending upon your circumstances, you may need as little as 2 months’ emergency savings or as much as two years’ expenses according to CNBC.
You can give your emergency savings an extra boost by depositing it in a high yield savings account like AimBank’s AimElite Savings Account to put your money to work for you. For current interest rates, contact your local branch to speak with a personal banker to help find the right account for you.