5 Ideas for Using Your Tax RefundAuthor: Katie Conroy | April 14, 2022 | 0 Comments | 12 View(s)
You’ve just gotten your tax refund, and you’re excited to have some extra cash on hand! But you’re not sure how to spend it - after all, you want to make a smart investment. With guidance from a planner at Financial Advisors, you can make smart money decisions and spend your tax refund wisely. Here are a few ideas that might work for your needs and budget!
Starting a Business
If you’ve been thinking about starting a business, your tax refund could help you cover some of the startup costs! Launching a business might be cheaper than you think, and you can finance lots of your key initial expenses with your refund, like the cost of incorporation. You may want to file for corporation status, especially if you’ll be working with investors, because it’s easier to transfer shares compared to LLC membership interests. Furthermore, seasoned investors often prefer the predictability of the corporation structure.
Should you decide to incorporate as a corporation, you may want to use a budget-friendly online formation service, rather than paying a lawyer. They can help you fulfill all of your state’s unique requirements.
Opening a College Fund
If you have children, you could use your tax refund to open a college fund. And if you’re not sure how to go about opening a college savings account, you may want to speak with a financial advisor who can walk you through the process. Banks states that while there are several different types of savings accounts that you can use to finance your child’s future education, you’ll probably want to open a 529 college savings plan because it generally provides a higher interest rate than a typical savings account.
Saving an Emergency Fund
Do you already have an emergency fund for home maintenance? If the answer is no, it’s time to start one. Using your tax refund to start an emergency fund will bring you peace of mind. After all, we can’t avoid emergencies forever - sooner or later, you’re bound to end up with a surprise bill that you need to pay, and if you don’t have an emergency fund, you may need to put the expense on a credit card and take on debt. You can open a new savings account with your current bank and designate it as your emergency fund.
Have you been trying to fix your leaky dishwasher on your own? Do you suspect that your HVAC system needs a tune-up? Are you pretty sure that your dryer is on its last legs? If this sounds familiar, you’ll probably want to use your tax refund to fix up or replace your appliances. Sure, sometimes a DIY-style repair is possible - but sometimes, it’s best just to turn the job over to the professionals!
What if your yard is looking a little untidy? You’ve thought about tackling the landscaping process on your own, but truthfully, you just never have the energy on the weekends to get the whole job done by yourself. You can use your refund to hire a professional landscaping service so that you can sit back and relax - and soon enough, your yard will look fantastic again! Bob Vila states that landscaping typically costs about $3,415, so your refund could cover this entire expense or a portion of it, depending on how much money you got back.
Your tax refund is basically a mini windfall, but you don’t want to rush out and spend it on something you don’t really need! It’s important to think about big spending decisions carefully. With these tips, you’ll be able to make your tax refund work for you.
Ready to get your financial life in order? Connect with a planner through Financial Advisors and find an advisor through our website today.