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Nothing perks most people up like a nice little windfall of cash from the IRS thanks to their tax refund. There are so many things you can do with your tax refund this year, but before you start planning your next weekend getaway or shopping spree, consider how you can actually set yourself up for financial freedom. It'll probably feel a lot better to set yourself up for success with your tax refund this year than a quick thrill on something you don't really care that much about.
This post is in partnership withLexington Law,thank you for supporting brands who support TCM. As always, all thoughts, opinions, experience, and advice is my own.
Plan for retirement
Whether your company has a 401k or you're putting money into an IRA, saving for retirement is always a good idea. Currently, for 2019 you can contribute $6,000 annually to an IRA. If your company offers a 401k, look into whether or not they will match your contributions, and up to how much. If they do have a matching program, then contributing to your 401k with them should be a top priority – that's free money after all!
Invest
Invest in the traditional sense of mutual funds and stocks is a great idea if you're okay with a long term investment. Meaning it'll likely take you longer to see a return on your money, so you won't be pulling it out anytime soon. If a long term investment isn't what you're looking for consider investing in yourself in more immediate ways like finally taking that photography class you've always wanted or hiring a professional to help you get out of debt and repair your credit score. Also consider investing in your kids futures by setting up a college fund or retirement account for them.
Protect your identity
While it's not the most sexy of things do with your tax refund, it's definitely one that will save you a headache down the road. Consider signing up for theLex OnTrack Identity Theft Protection toolto help you monitor and protect your identity from theft with $1 million in identity theft insurance. Your tax refund will go towards protecting your time and stress levels. Because let's be honest, getting your identity stolen takes up a lot of your time and adds loads of stress. Remember, time is more valuable than money at the end of the day. You can always make more money, but you can never get your time back. You can learn more about theLex OnTrack Identity Theft Protection tool here.
Reach financial goals & up your credit score
Getting a tax refund is an opportunity to set yourself up for success financially. Whether you have a financial goal to get ahead on your student loans or to finally up your credit score use the money strategically to save you more money down the road. If you’re looking to up your credit score consider working with professionals like Lexington Law.
Lexington Law firm has helped people with everything from bankruptcies, to charge-offs, to tax liens, and virtually every credit problem. They've worked with clients to remove millions of items from their credit reports last year alone and have been in the credit repair field for over 15 years. They help clients with everything from challenging the bureau's to intervening and sending cease and desist letters to creditors, to coaching you to understand and address damaging credit report changes as they occur, and so much more. You can get your free credit repair consultation here.
Emergency Fund
When you're making wise financial choices, having an emergency fund is essential. Nothing will derail your progress on repaying debt and improving your credit score like an unexpected expense that causes you to cut into your debt repayment budget. An emergency fund ensures you have the peace of mind to keep making wise financial choices and stay on the right track even if something comes up that could throw you for a loop. Consider having around six months worth of income in your emergency fund and keeping it in a high yield savings account (these are often at online banks with no brick and mortar store). Read more my complete guide to emergency funds here!
Get ahead on your home
Our homes are often a place where we sink a lot of money without even realizing it at times. Consider using your tax refund to get ahead on your mortgage payments. By making payments ahead of time to your principal, you can save money on interest down the road. Also consider replacing inefficient appliances or things around the home that are costing your money. For instance, if you have an old home with outdated windows or doors, it could be costing you with a higher A/C bill. Some energy companies will even come out and do an energy audit for free to see where you can save on your monthly bills which can help you make the decision about where to spend your tax refund to save some money each month.
Start saving for a major financial goal
Instead of rushing out for a mini weekend getaway, consider using your tax refund towards a larger goal you've been really wanting to do. Whether that's buying a home, starting a business, or going on a transatlantic month long adventure, it'll likely take some money and planning. Consider your refund your “seed” money to get started!
What are you planning on doing with your tax refund? Or let me know what you've done with it in the past in the comments!
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What to do with your tax return this year? List of seven things:
Plan for retirement
Invest
Protect your identity
Reach financial goals & up your credit score
Emergency Fund
Get ahead on your home
Start saving for a major financial goal
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