It's that time of year when you hand off your paperwork to file your taxes to the IRS... and if you're one of the lucky ones, you might be eligible for a refund. If that's you, here are 3 ways to use your refund wisely.
1. Pay off debt.
Start with credit cards or debt that have a high interest rate first. Apply some of your refund to knock down a chunk of what you owe.
2. Build your emergency fund.
Generally, at least 3-6 months worth of total monthly expenses is what you want to have saved for your rainy day emergency fund. Does your income change from month to month? Consider building an emergency fund with at least 6 months of total monthly expenses for the less busy seasons.
Building wealth over the long-term can be better achieved through investing. Money in the bank typically has a lower growth potential -- make your money work for you by investing in a portfolio that aligns with your financial goals, risk tolerance and time horizon.
Investing your tax refund into your business (i.e. systems to help scale and grow) or in yourself (i.e. courses or self-care) are other ways to build your wealth.
BONUS: Create a spending plan to tackle all 3 areas AND give leave yourself some guilt-free spending money. By assigning a goal for each dollar of your tax refund it will help avoid the urge to spend the entire amount.
What do you plan on doing with your tax refund this year?