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Smart moves to make the most of your tax refund

While the economic effects of the pandemic have made it harder to save, it’s important to try and keep saving for future expenses and emergencies.

If you receive a tax refund this year, it’s a good idea to consider how you can use those funds to accomplish personal goals, change your financial status, and secure a better future for you and your family. This is the time to take a deep breath and think wisely. To help get you thinking, here are some smart moves to get the most out of your tax refund:

Fund your retirement

You don’t know where the economy will head in the future, so leaving your future to Lady Luck isn’t the best idea. Whatever you save today, you can spend in the future when you need it more. After retirement, you may encounter health and financial issues. It’s crucial to have enough saved so you don’t have to spend your retirement years worrying about financial security.

Start a viable business

If you’ve done your homework and planned ahead, using your tax refund to start a viable business could be a smart move—especially if you can generate more revenue than at a typical employed position. 

Invest in a new home or upgrade your current home

One of the best ways to spend tax refund money is to use it toward purchasing a house, especially if you’re renting right now. Owning a home can bring you more financial stability and the peace of mind that comes from setting down roots in one place. 

If you like your current home, why not invest in increasing its equity? You could add a swimming pool or patio or use the money toward a bathroom or kitchen renovation. You could also repair water damage, finish your basement, add security and fire systems, extend your closets or paint your home. Every penny you invest in your house will add to its value when it comes time to sell.

Save for education

If you’re all set for retirement and have money left from your refund, consider contributing to your child’s 529 plan or other eligible education fund to reduce your taxable income.

Avoid spending on frivolous things

When tax refund money comes their way, some people are tempted to buy immediate-gratification items—expensive clothing, gaming setups, big-screen televisions or a fancy car. If you’re tempted, keep in mind that these items are material things with limited value and a limited life span. You’ll get a better return on your investment if that money is used on something that has long-term value instead of short-term satisfaction. 

Be smart and spend your refund wisely

There are so many productive ways to spend your tax return money. But we never know where the winds of fortune may blow, so just be sure to analyze your spending decisions carefully so you don’t regret impulse buys later. Remember, any tax refund you receive is your hard-earned money coming back to you. Use the opportunity to get ahead of the financial game and spend it well. 

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