Tax refunds could help in future financial planning
The deadline to file tax returns is Monday, April 15. Financial adviser Jeff Nicholas said many people tend to blow their refund, sometimes even spending the check before getting it.
The deadline to file tax returns is Monday, April 15. For those who might be expecting a refund this year, it could be a good time to ask, what are some financially responsible ways to use it?
Financial adviser Jeff Nicholas said many people tend to blow their refund, sometimes even spending the check before getting it.
"While it does do good in terms of stimulating the economy and getting money out there, on the flip side of that there's other responsibilities that money could be used for. It's probably smarter to do the adulting thing, if you will, that we sometimes don't like to do with our money," he said.
He recommends paying down any debts, like credit cards or loans.
"So, if you've got some debts that are hanging out there, use the refund to be able to pay down those debts," he said. "Maybe starting with either the largest balance or highest interest rate first."
He said to consider putting some of the refund towards retirement savings.
"It's always a good idea to say hey, what if I just took a part of this and just funnel this back over towards some type of retirement savings. It can never hurt to put a little more back for retirement someday," he said.
Knowing where that money goes can help with financial responsibilities in the future.
"At the end of the day, you know, the benefit to identifying where that's going to go, you now are in control of the money vs. the money being in control of you."
Nicholas suggests having three to six months of salary saved up for unexpected expenses, or to replenish savings that may have already been tapped into from earlier in the year.