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Stretching Your Refund: 5 Things You Can do to Reap the Benefits of Your Tax Return

Apr 04, 2017

It’s that time of year when most start seeing a tax refund from Uncle Sam! Most Americans simply don’t add their tax refund into their annual budget since they see it as a bonus check, which can be a bad thing if they aren’t the type to save up for an emergency or unexpected expense. Tax refunds aren’t a gift from Uncle Sam, rather they’re made up of money held from your paycheck throughout the year. Saving or spending it wisely is the way to go, and we’ve put together some steps below to stretch your refund as much as possible.

We do what we can to make your financial well-being a worry-free one. Contact us today to learn what we can do for you!

Breaking it Down

Start the tax return process wisely by signing up for a direct deposit to get your refund quicker. After you’ve filed, start thinking about smart ways to invest your return. If you’re on a tight budget, a simple solution, for example, is to enroll in your employer’s 401(k) retirement plan (if they offer one). You can start with just 1% of your salary and increase it gradually throughout the years as your pay increases. The point here is to start planning for the future. Whether it’s bonds or a 401(k), our investment services can help you get there.

Growing Your Emergency Fund

Many prefer to keep credit cards instead of an emergency fund. While having a credit card does come with benefits, an emergency fund is something you won’t have to pay interest on. Emergencies are bound to happen, whether they’re car repairs, medical bills or a loss of employment. Our savings accounts can help build and manage the nest egg you need. How much you save is up to you, but ideally, have anywhere between four and six months’ worth of savings to help you and your family in case an unexpected issue comes up.

Pay Off Your Debt

If debt is keeping you from building an emergency fund or investing in something profitable, then the smartest thing to do with your refund is to pay it off for good. Try the snowball method of starting with the smallest debt you owe and working your way up to the biggest. This will give you the motivation to pay off everything you owe.

Take Care of Yourself

If you’ve been putting off your medical or dental needs because of money, you could allocate your income return’s funds for those needs first. In order to make financially healthy decisions, take care of yourself physically. Even if it’s a mattress that will help your back and ultimately make you feel better - don’t feel guilty. It’s for your well-being.

Pay Yourself

Don’t be afraid to reward yourself once you’ve started making financial goals. By all means, start a fund for a much-needed vacation or an upcoming holiday. Your income tax refund can be used to either beef your account up or even start one. If you need an account to avoid reckless spending, then consider a savings account as mentioned above.

Financial Services That Make Things Easier

Debating what to do with your income tax return can be tricky. It’s easy to spend it on things that are wants and not needs. Whether it’s paying off a debt, saving for the future or using it to buy something you really need, put your return to good use. Our bank in McAllen prides itself in providing the best financial solutions to help you achieve those goals. Call or visit us today!