After the hassle of completing your tax return, you’ve finally received your tax refund. Of course, you’re excited to have an extra influx of cash, but maybe you’re not sure about the best way to spend it. Luckily, there are plenty of smart moves you can make with your refund money that can benefit you now or in the future.
Check out these smart ideas for your tax refund and use professional tax preparation in Des Moines, IA to help you get the most out of your taxes.
Start an Emergency Fund
If you’re not sure what you want to do with your tax refund this year, saving it is always a good idea. Open a savings account where you can store money for a rainy day and deposit some or all of your tax refund into the account. The money in this account can then be used to help pay for unexpected expenses, such as car repairs or emergency dental work.
Even if you already have an emergency fund, you should aim to have enough money to pay for six months of expenses or more. This gives you a safety net in case something happens and you lose your job or are suddenly unable to earn income. Consider putting some of your tax refund into your emergency fund to make sure you’ve got enough money saved up.
Create Accounts for Savings Goals
For those who like to travel or are hoping to make a big purchase in the future, such as a new car, it may be a good idea to drop your tax refund into a savings account for specific goals. As long as your bank doesn’t charge any hidden fees for your savings account, using different accounts for different savings goals can help you fight the temptation to use the money for other things.
One way to help your tax refund money continue to grow is by putting it to work in an investment account. If you’re unsure about investing, consider speaking with a financial advisor to help you choose stocks, mutual funds and other investments. Investing your refund can help you not only save the money, but you can also watch it grow over time in the investment account. Just remember that investing has risks involved, and returns aren’t guaranteed.
Pay Off Debt
Anyone who has a large amount of debt knows how difficult it can be to pay it down. If you’re facing big credit card balances or a loan with a high interest rate, your tax refund can help you reduce or eliminate your debts. Usually, it’s best to focus on paying down debts with the highest interest rates first. You can also use your tax refund for debts with lower interest rates, such as student loans or your mortgage.
Get Help with Tax Preparation in Des Moines, IA
Before you can decide what to do with your tax refund, you need to make sure you’re using the right tax strategies. Tax preparation in Des Moines, IA with help from the tax experts at Accounting & Tax Professionals, PLC can help you make smart choices and get the biggest refund for your taxes. Get in touch with us today to start planning for tomorrow!