It’s tax season again and W-2s are hitting mailboxes around the country. That means it’s federal income tax season—and it’s also your chance to invest in yourself. This year the average federal income tax return is estimated to be in excess of $2,000. What better way to get a jump start on your financial goals for 2020?
If you’re like us, you get your refund check (or direct deposit!) and immediately begin thinking, “What should I do with this money?” While there are many good uses for it (savings, paying off debt, car repairs, or that long needed vacation), we’ve compiled a list of our top three ideas you can use your income tax return for.
1. Start an emergency fund.
Many people in the United States have trouble coming up with emergency money if an unexpected bill is more than a few hundred dollars. A major appliance needing to be replaced, a car repair, or a medical expense can cause you to rely on high interest credit cards or loans that work against your financial goals. At Popular Direct, we’re all about helping you meet your financial goals. Having an emergency fund that you can access when you need it is a great way to set yourself up for both short-term and long-term financial success in 2020.
2. Begin a new investment.
One of the hardest parts of beginning to invest in your financial future is raising the money to begin the investment. Saving money is not easy. It takes a combination of discipline, circumstances, and lifestyle changes to begin to find seed money for investments. A tax refund is a terrific way to begin investing because the saving was done throughout the tax year! If you already have an emergency fund, look into starting a CD, high-yield savings account, IRA, or other investment that will give you great returns in the years to come. Investing is one way to achieve long-term financial goals.
3. Invest in your health by taking a vacation.
This is not one you find on many “what to do with your tax return” lists, but it should be. Remember, we build responsible financial plans so that we can live our lives! Taking a break and spending time with family, friends, or alone with our own thoughts is an invaluable way to refocus on our long-term goals. Reducing stress helps to keep us happy and healthy so that we can make good decisions and live rewarding lives. A federal income tax return is a great way to take a break and reward yourself, invest in your health, and enjoy life without having a negative effect on your existing financial plan.
We hope you’ve enjoyed these three ideas for how to spend your income tax return. At Popular Direct, we aim to be a partner in helping you to meet your financial goals. Let’s have a great year together and warm welcome to the ‘20s!
The information mentioned in this article is for informational purposes only, is intended to provide general guidance and does not constitute legal or tax advice. Each person's situation is unique and may materially differ from the information provided herein. You should seek the advice of a financial professional, tax consultant and/or legal counsel to address your specific needs before any financial or other commitments regarding the issues related to your situation are made. Popular Bank does not make any representations or warranties as to the content contained herein and disclaims any and all liability resulting from any use of or reliance on such content. This article should not be considered as a recommendation to invest in any particular financial product or service.