Get the Most from Your Tax Refund

Your Credit Union in Las Vegas Urges You to Think Carefully Before Cashing in Your Retirement to Pay Bills
For the 2020 tax year, the average tax refund was $2,827. It's important to remember that your refund isn't "free money."

Instead, look at it as part of your salary and treat it as such. Here are a few suggestions for making the most of your tax refund.

You don't have to stick with a single suggestion. Splitting your tax return for multiple financial goals is a terrific option for making the most of your tax refund.

Save for an Emergency

If you don't have an emergency fund or if it's lower than you would like, use your tax refund to boost your savings.

Though most financial advisors suggest having an emergency fund equal to 3-6 months’ worth of your income, having $1,000 or even $500 will help you weather unexpected expenses.

Keep your emergency fund in an interest-earning account, like a savings account or money market account, to preserve the value of your savings.

Pay Off High-Interest Debt

Paying down your high-interest debt is another smart way to use your tax refund.

If you have credit cards or personal loans with an interest rate that's in the double digits, using your tax return to reduce your debt decreases the amount that you pay in interest.

Once you pay a debt completely off, you'll eliminate a monthly payment, reducing your expenses.

Boost Your Retirement Fund

For the 2021 tax year, you can contribute up to $6,000 to an IRA or $7,000 if you're 50 or older.

You may already have a 401(k) plan or pension fund through your employer. However, it's smart to incorporate an IRA into your retirement savings plan because it offers flexibility for your nest egg.

If you contribute to a Roth IRA, your contributions are made with after-tax dollars. When it's time to withdraw your money, you won't have to pay taxes on your withdrawals.
You can also withdraw the contributions (not the earnings) at any time without having to pay a penalty.

Pay or Save for Annual Bills

Your budget might include bills that you pay annually, like your car insurance, property taxes, and scheduled car maintenance. Use your tax refund to pay some of these expenses or set the funds aside in a savings account.

Need a new account to help you make most of your tax refund? Contact CCCU today!