April 7, 2020

4 Ways to Use Your Tax Refund to Get Ahead

Posted

Did you know that March is Asset Management Awareness Month? Let me put that for you in plain English: Asset is a fancy word for your stuff, and management means taking control of your stuff. Here’s a practical opportunity to try asset management: What should you do with your tax refund this year? Let’s look at four ways to make the most of it.

Adjust your withholdings
Sure, it’s fun to get a big chunk of change all at once, but tax refunds don’t come from Santa Claus! A refund means that you’ve been overpaying the government all year. If you’re getting a big tax refund, I want you to adjust your withholdings in the coming year. You could have been using that money, saving it on your own, or investing it all year long! Talk with a tax advisor about how you can have a bigger paycheck and stop giving the government an interest-free loan.

Pay off debt
Debt is a thief. It will steal your ability to build wealth—and your peace of mind too. If you have consumer debt from credit cards, big purchases, or student loans, I want you to attack it with all the energy you have. So, why not use your tax refund? If you don’t have any consumer debt but you do have a mortgage, then throw this money toward the mortgage. Move yourself one step closer to total debt freedom.

Invest it
If you’re out of debt, and you’ve built up an emergency fund that can cover three to six months of living expenses, you need to invest 15% of your gross income in retirement. You can just sweep that tax refund into an investment fund or your Roth IRA. And if you don’t have a Roth IRA, now’s a great time to get one!

Splurge a little
It’s okay to have fun with the extra cash, as long as you’re debt-free with that emergency fund in place. If you’re married, you could use your tax refund to go out for a special date night. Or maybe you could buy tickets to an event for your whole family. Take time to pause, breathe in, and enjoy the people in your life!
Your refund is an opportunity to make a great financial decision, not just a good one. And remember: Progress doesn’t happen by accident. It’s not the big, one-time choices that will determine your financial future. It’s the habits you form and live out every day!

About Chris Hogan
Chris Hogan is a two-time #1 national best-selling author, financial expert and host of The Chris Hogan Show. For more than a decade, Hogan has served at Ramsey Solutions, equipping and challenging people to take control of their money and reach their financial goals. His second book, Everyday Millionaires: How Ordinary People Built Extraordinary Wealth—And How You Can, Too, released in January 2019. You can follow Chris Hogan on Twitter and Instagram at @ChrisHogan360 and online at chrishogan360.com or facebook.com/chrishogan360.

Comments

No comments on this story | Please log in to comment by clicking here
Please log in or register to add your comment
Share!
Truly local news delivered to every home in town