Tomorrow is April 15th and that means it is tax. For some it is a day of dread but for many Americans it is actually a good day as they can expect a nice tax refund. The average tax refund is just over $3000.00 which is a nice chunk of change and which leads many to question what exactly should be done with all that money.
Build A Savings
According to recent studies it was found that over half of all Americans do not have a savings. This means for most people if they were to lose their job or have a serious medical issue or a car breakdown they would not be able to meet their monthly obligations. When that happens people can expect late fees, higher interest rates which leads to higher payments, and eventually not being able to pay your bills leads to judgements and repossessions. Once that happens it is much harder to get back on track and comfortable.
At Top10 we recommend every should try to have at least 3 months worth of bills in savings in case the unexpected happens. This will be able to give you a cushion while you work to get your life back to normal. By putting your tax refund in a savings account you start the process of building a savings and alleviating future stress.
Pay Off Debt
If you are one of the millions with credit card debt you may want to think about paying down your debts with your refund. By paying down your debts you will not only be able to lower what you owe and your monthly payments but you will also be able to improve your credit score. This is because your credit utilization ratio (the percentage of what you owe vs your available credit) counts for about 30% of your credit score. With a higher credit score you will be able to get lower interest rates which will also help to reduce your payments.
This is one most people use their tax refund for and it can be a good thing. If there is something you have always wanted or a trip you have always wanted to take or an activity you have always wanted to do then with your refund you might be able to do that. Being able to spend money that isn’t part of your budget on this is something good and we believe that everyone deserves a little fun in their life.