If you’re planning to get a tax return this season you might also be planning an immediate visit to the shopping mall. But while it’s always fun to have spending money, it’s also a good opportunity to set yourself up for financial success in the future. Here are a few ideas on how.
Pay down existing debt
If you have debt that’s putting your ledger in the red, even a few hundred dollars extra can make a huge difference. Use it to pay off your credit cards, make a significant dent in your auto loan, or to get ahead on those student loans. It may not seem like fun now, but your future self will thank you.
Build up your savings
Most financial advisors suggest keeping enough in a savings account to live off of for 6 months in the event that you lose your job. While that number may seem huge, especially if you haven’t saved a lot in the past, it’s one of the best ways to protect yourself and your family from potential disaster if there was ever a situation where you were unable to work.
Investing in the stock market it one of the best ways to grow the money that you have, and unlike how it may be portrayed in media, stock investing isn’t just for the elite on Wall Street. Investing in a simple portfolio of index funds is a proven way that you can slowly increase your wealth over time. But remember, the stock market can be turbulent, and it’s only a good idea to invest money that you don’t plan on needing or withdrawing for at least 5 to 10 years.
Start a college fund for your children
The cost of education continues to skyrocket, and if you have children, paying for college is probably the cause of some worry. Prepare yourself for success from starting by squirrel away money for them to one day use as soon as possible. Even if you only invest a small amount a year, that money can balloon into a sizable chunk of cash by the time your children turn 18.
Take the plunge on your small business
If you have dreams of starting a side gig that could one day turn into a full-time job, use your tax return money to invest in yourself. You can set up your corporation or LLC or pay for the supplies you need to get started.
Be smart with your tax return money this year and use it to make financially smart moves that will set you up for success.