Top Priorities for Your Tax Refund

Save it, Spend it, or Invest It. But how?

There are countless things you can do with your tax refund, but there are also a few really smart things you can do with it to make the most out of your extra little gift from the IRS. We’ve put together a list of ways you can either spend your refund, save your refund, or simply invest it into something.

1. Save it for a rainy day…
Creating or rebuilding an emergency expense fund is crucial. While it may be easy to think that you don’t have the money to start an emergency fund now, you’ll wish you did if the time ever comes. The rule of thumb is to have anywhere from 3-6 months expenses in this account. In the event of job loss or medical emergency, lack of savings could force you to seek out short-term loans at high interest rates.

2. Pay off high-interest debt.
Speaking of high interest, some of your debt, whether it be student loans, credit cards, mortgage or car payments, can really add up if associated with a high-interest account. The accounts with the highest interest should be paid off first thing. Paying off debt with your tax refund could save you hundreds of dollars down the road.

3. Retirement? Oh yeah.
There’s a pretty good reason why most of your employers offer some form of retirement plan; because you’re going to need it! Many financial advisors like Missouri Central Credit Union recommend allocating 10-15% of each paycheck to retirement. If you don’t already have a retirement account, there is no better time to start saving than now. Use your tax refund to get a jump start and save money that was never on your paycheck to begin with! Still not convinced?

Let’s say that $100 is 5% of your paycheck and your employer matches 5%. You get paid bi-weekly so therefor, $400 is going to your retirement fund (401k) each month. After doing the math, you’ll save $4,800 per year. Twenty years from now, that’s $96,000! Still don’t think you need a retirement fund?

4. Make home improvements.
Home improvement is a great investment! New cabinets or appliances can be an affordable way to update to your home. Small updates to your home can come with a large ROI, as it will increase curb appeal on the outside and modernize your home on the inside. Check out this list of affordable home improvements (national average) from the Home Advisor True Cost Guide:

  • All New Cabinets: $4,909
  • Paint a Home Exterior: $2,768
  • Sliding Glass Door Replacement: $1,737
  • Refinish Hardwood Floors: $1,638
  • Garage Door Installation: $1,068
  • Install an Entry Door: $929
  • HVAC Repair: $336
  • Gutter & Downspout Repair: $328
  • Repair Blinds: $107
  • Wood Fence: $5-$10 per foot

5. Beep beep!
While some would argue that you shouldn’t use your tax refund on a depreciating asset, a larger down payment allows the buyer to pay less in interest, long term. It is nearly impossible to live in Missouri, especially on the outskirts of Kansas City, without a car. Getting a car might also give you the freedom you need to earn more money and work freely.
Missouri Central offers a variety of auto loans to new and existing members that make owning a car stress-free and attainable. Not to mention, that tax refund can be a great jump-start to
paying off your vehicle faster!

6. Simply just save it.
This one may come as a surprise, but the hottest trend of 2018 is saving. Save your tax refund like you never got it. There is no monthly service fee associated with opening a Primary or Secondary Share Savings account at Missouri Central Credit Union and interest is paid quarterly on accounts with an average daily balance over $100. Put your tax refund directly into a savings account at Missouri Central and you can start earning on it today!

7. Start an itemized savings account.
Speaking of just saving it, itemized savings accounts can allow you to save for something more specific, something to look forward to. Whether it is a want, like a vacation, or a need, like a new car, those that create separate account for such thing have better luck meeting their financial goal than those that do not.

Missouri Central, believe it or not, has a Christmas Club Account specifically for the gift of giving. Finances shouldn’t be a burden when the holidays come back around, so it may be smart to start saving now! Can you imagine what Christmas would be like if your tax refund came in December every year!?

8. Travel.
While it is not recommended to blow all your hard earned money on travel, it’s not always a totally bad idea! Sometimes, you just need to get away. Set a reasonable budget, plan a time and place that is attainable, and start saving NOW! Your tax refund could be enough to cover flight, hotel, car or possibly all three!

You can save even more money when planning by using some popular #TravelHacks from the pros. Check flights often, as prices can fluctuate. It is cheaper to fly on Tuesdays and Wednesdays than it is Thursday-Monday.

Some would say that traveling is not the smart thing to do with your tax refund, while others would call it an investment to your mind and soul. After all, experiencing the world with an open mind is priceless.

9. Got kids? Want kids?
No, they don’t need more toys, but soon enough, they’ll be headed to college. Get your children ready early by putting your tax refund into an interest bearing savings account that they can access when they graduate high school. College is a tough transition for all students, so it may be nice to have a little extra saved away for when they make their way to campus. Even if your mini-me is just a baby, it’s never too early to start saving for their career.

10. Take a Risk.
A Bitcoin costs approximately $9,940 today. If you get $1000 back in taxes, that’s 1/9 of coin! Way to go! Cryptocurrency is the latest thing and it may be here to stay. Cryptocurrency is has been around since 2009, but became popular when Bitcoin soared to a record high in late 2017. It is known today as a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. Bitcoin isn’t the only form of cryptocurrency; it is actually just one of many. Other forms of cryptocurrency include Ethereum, Ripple, Litecoin, Monero, Dash, and more. There is still so much to learn and understand about the crypto-world, so it may not be safe to dive in with all of your money head first, but if you’re a risk taker, spending money you never actually got may be the way to go!

What are you going to do with your 2018 tax refunds? We’d love your feedback!