If you're anticipating a tax refund, you might be interested in how to best stretch the value with actual savings while also making positive decisions regarding the use of the funds.
With a little planning, you can maximize the benefit of your tax refund with one of these strategies:
Pay off debt. If you have debt, a wise spending priority can be to reduce or eliminate it. This is especially true if you have any credit card debt which is costing you money. With rate increases, credit card interest can cripple you financially. Start by paying down debts with the highest interest rates and work your way down the list until you bring your debt burden down to a manageable level.
Save for retirement. Saving for retirement works like debt, but in reverse. The longer you set aside money for retirement, the more time you give the power of compound earnings to work for you. This money can even continue working for you long after you retire. Consider depositing some or all of your refund check into a Traditional or Roth IRA. You can contribute a total of $7,000 to an IRA in 2024, or $8,000 if you're 50 years old or older.
Save for a home. Home ownership is a source of wealth and stability for many Americans. If you don't own a home yet, consider building up a down payment fund using some of your refund. If you already own a home, consider using your refund to start paying your mortgage off early. This is especially important if you have a recent mortgage with higher interest rates.
Invest in yourself. Sometimes the best investment isn't financial, but personal. If there's a course of study or conference that would improve your skills or knowledge, that could be a wise use of your money in the long run. You can also invest in personal well-being by using some funds on health, hobby, or travel interests.
Give some of it away. Helping people, and being able to deduct gifts and charitable contributions from your next tax return, isn't the only benefit of giving to a good cause. One-time monetary gifts and giving either goods or money to non-profits can help reduce your taxable income.
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