Smart Ways to Use Your Tax Refund

Tax season is officially here! If you’re expecting a tax refund this year, we have some tips on smart ways to use your tax refund so you can set yourself up for financial success.

Pay Off Debt

It can be tempting to use your tax refund to splurge on a shopping spree, but using it to pay off some of your debt instead can be more beneficial in the long run. If you have high-interest debt from credit cards or personal loans, paying some of it off will reduce your debt burden and save you some money on interest payments. 

According to the Education Data Initiative, the average student takes about 20 years to pay off their student loan debt. Imagine how great it will feel to reduce a chunk of that debt and get closer to being financially free of it. 

Build an Emergency Fund

Having an emergency fund is a great safety net to have when unexpected expenses arise. We suggest setting aside at least three to six months’ worth of living expenses. Using your tax refund to begin building your emergency fund or add to what you already have can give you peace of mind and financial stability if there’s an emergency.

Check out our guide, How to Start Building an Emergency Fund for steps on how to get started.

Home Improvements or Repairs

If you’re a homeowner, using your tax refund toward home improvements or repairs can be a wise financial decision. Whether it’s fixing a leaky roof, upgrading appliances, or renovating a bathroom, making home improvements is a satisfying way to increase your property value. Plus, increasing the comfort and functionality of your home is a long-term benefit that will give you and your family a higher quality of life.

If you want extra money to put towards your home improvement project, a HELOC at Launch CU allows you to use your home’s equity to your advantage to control how much you borrow and when.

Invest in Yourself

Another smart way to use your tax refund is to put it towards bettering yourself. If you have certain career goals, consider enrolling in a course or getting a certification that will enhance your skill set.

Do you have health and fitness goals in mind but don’t know where to start? Use a portion of your tax refund to hire a personal trainer or nutritionist who can get you started on living a healthier lifestyle. Using your tax refund to invest in yourself can provide long-term benefits that improve your quality of life.