After the Tax Day deadline for filing your 2021 taxes on April 18, Americans are now waiting to receive their tax refund, which this year has averaged $3,175, $360 more than last year.
An amount like this is a great help for the economy of families, although not everyone uses this money for the same purposes, because while some think about saving it, others prefer to take a vacation or spend it on something they have wanted for a long time.
This tax refund represents an opportunity to achieve one of the many financial goals, but it is key to decide how to invest this money.
So here are some options on how to make the most of your tax refund.
Planning for retirement
Chances are you’re most likely not saving enough for your eventual retirement, so if so it’s worth allocating your funds to your retirement account, either a partial or full amount so that money will grow, thanks to compound interest.
Create an emergency savings fund
Financial experts recommend having enough money saved in the account to keep you financially afloat for three to six months, especially if you own your own business or lose your job.
Using your tax refund to have a financial cushion in case of emergencies could help you sustain your finances during tough times.
Investing your money
Whether you invest some or all of your tax refund, it can give you a boost in planning for the future or allow you to take the next big step.
Saving for your child’s college fund
Regardless of your child’s age, using your tax refund in a 529 fund or other college savings account is always a great idea.
Home improvements or paying off debt
Your tax refund can be used to pay off your credit card bill, pay for car repairs or make home improvements, even start saving for a new house or apartment.
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