Tuesday, April 25, 2017

5 Worst Things To Do With Your Tax Return (And What To Do Instead)

It's refund season! April 15th has come and gone, and many people are already receiving their tax refunds. If you're one of the lucky people who are getting a tax refund this year, what you do with your money now can impact your future situation. Don't make the mistake of wasting your refund! Our Lake of the Ozarks community bank is here to help by offering these money-smart alternatives to what might be your first impulses.

Mistake #1: 
Blowing Your Refund On A "Just For Fun" Purchase
Whether from your tax refund, a gift, or an inheritance, blowing a financial windfall on a single purchase is never a wise move. While the urge to treat yourself to a brand new TV might be tempting, chances are you don't really need a new one. Instead, consider using the money to make any repairs or home improvements you may have been procrastinating. Performing needed upkeep on your home helps maintain/boost its value, which builds valuable equity.

Mistake #2:
Repaying Debt That Will Build Right Back Up
Using tax refunds to pay down credit card debt is a popular option, and not necessarily a bad one. Your tax refund can be an excellent way to get out from underneath high-interest debt. If your debt will simply rack right back up, however, your efforts may be wasted. If you have a history of consistently building up credit card debt, you may want to use your refund to pay down other debts instead, such as car loans or your mortgage. As for the credit cards, you might be better off limiting your spending and paying your balance in full every month.

Mistake #3:
Letting Someone Borrow Your Cash
Loaning money to friends or family in times of need may seem like an honorable gesture, and indeed, it sometimes can be. Unfortunately, it often creates a great deal of unnecessary stress in once-close relationships. Many experts suggest making it a personal policy to refrain from loaning money to friends or family under any circumstances. To avoid getting pressured, try not to talk about your refund with anyone other than your spouse. If they don't know how much you got back, other people may be less likely to ask to share a piece of the pie.

Mistake #4:
Parking Your Refund In A Low (Or No) Return Account
Once your refund is in your possession, it has to go somewhere. If you choose not to spend or invest it, don't make the mistake of parking it in a checking or savings account that offers little to no interest. You could get a lot more "bang for your buck" by instead putting the money in a higher-interest account, such as the Kasasa Saver at First Bank of the Lake. Your money has to sit somewhere - it might as well earn you money in the process!

Mistake #5:
Not Thinking Long-Term
The moral of the story is simple: when it comes to your tax refund, the smartest thing you can do is strategize ways that you can use your extra influx of cash to put yourself ahead in the long run. Anything that focuses only on the immediate moment (such as spending it on a "just for fun" purchase or funding a last-minute vacation) wastes a valuable opportunity to improve your overall financial situation. Investing your refund in an individual retirement account (IRA) is an example of a particularly advantageous way to use your refund to put you ahead in the long-term.

First Bank Of The Lake Is Here To Help!
Whether you are looking for a high interest-bearing savings account at the Lake of the Ozarks or a place to set up an IRA in Osage Beach, First Bank of the Lake is your local resource. We offer a variety of different financial services to help you put your refund to good use. For more information, visit us online at www.FirstBankLake.com.

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First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.

Located at the entrance to the Osage Beach Premium Outlets!

4558 Osage Beach Parkway

Suite 100
Osage Beach, MO 65065

(573) 348-2265

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