Tax day has come and gone. Hopefully you are one of the nearly eight out of 10 U.S. tax filers who will receive a federal tax refund this year. The good news is that smart use of your tax refund can start you on the path to long-term financial security. Whether you are still waiting for your refund, or have already received it, Community Bank of Oak Park River Forest would like to highlight five tips for making the most of your tax refund:
Save for Emergencies
Deposit your tax refund into a savings account that serves as an “emergency fund.” Ideally, it should hold about three-to-six months of living expenses in case of sudden financial hardships like losing your job or needing to replace your car. This will help prepare you financially for anything that unexpectedly arises.
Pay off Debt
Pay down existing balances for credit cards, car payments or student debt. Start by paying off loans that charge the highest interest rate which will save you the most money in the long run. Not only will you save money, but you’ll enjoy the relief that comes with eliminating debt.
Save for Retirement
Open or increase contributions to a tax-deferred savings plan like a 401(k) or an IRA. Where can you get one? Most banks like Community Bank can help set up an IRA, while a 401(k) is an employer-sponsored savings program. Saving for retirement will help secure your long term financial wellbeing.
Put it Towards a Down Payment on a Home
The biggest challenge most first-time home buyers face is coming up with enough money for a down payment. If you intend to buy a new home in the near future, putting your tax refund toward the down payment is a smart move.
Invest in Your Current Home
Use your refund to invest in home improvements that will pay you back in the long run by increasing the value of your home. This can include small, cost-effective upgrades like installing energy-efficient appliances that will pay off in both the short and long term. If you have more substantial renovations in mind, you can always put it towards remodeling.
Instead of going on a spending spree, take a moment to evaluate your financial situation and decide on how to best use your refund, and follow one of the tips above. If you have questions on how to best put your tax refund to good use, contact Community Bank at 708-660-1000, or visit our website at www.cboprf.com. Community Bank has two locations: 1001 Lake Street, Oak Park and 7777 Lake Street, River Forest. Member FDIC | Equal Housing Lender.