The following is a guest post from Joy Mali
Ever heard of tax refunds? Well for starters, you get your tax refund when you’ve been paying more than you should all throughout the year. The refund is actually the government repaying the principal on a loan you made. If, however you want the unintentional charity to stop, you can adjust your withholding whenever you get yourself a new car or when you get a house etc. But then again, who doesn’t want to have their money back? Here are some of the best ways to use your tax refund to manage your debt and improve your credit score.
Manage your debt – I bet you already knew what to buy as soon as you got the money. You must be thinking about going shopping, or getting that new tablet you saw online, but a wiser way to use it is to finish off your debts. You’ll be shortening the overall payment period and the interest paid by a significant margin.
Save up for emergencies – If you don’t have debts to worry about, then why not just save it for emergency purposes? You’ll never know when it will come handy. You can use it for when you have to pay for your bills, especially when you’re salary is still two weeks away. A lot of people experience this; because unlike the regular 15/30, 16/1 pay days, some just get their salary once a month. It’s actually difficult to hold to a huge amount of money all at once so saving up for emergency bills will surely help you out.
Save up for school – If you’re planning to have children in the future then it’s never too early to save for their education. Let’s face it, high school and college are expensive therefore it is best to be ready before it happens. It may be financial sacrifice but don’t you think it’s worth it if it’s for your child’s education? You’ll be freeing your child from debts too after he or she graduates. If they can’t handle the costs, you’ll still be responsible with the debts because you are the cosigning parent. So why not prepare for it now?
For Future debts – You’ll never know when something urgent will happen. Whether it be medical bills or simply your electric bill, an extra amount of money will be very helpful. You won’t be worrying too much of what will be left on your incoming salary if you have some extra with you. You’re also being smart about your financial disposition.
There are better ways for you to use the tax refunds that you get. Yes, it’s true, it is a sacrifice but it will be something that you’ll be thankful for in the future. Think about your wants and needs well. Weigh them out and think about which one you’ll be benefiting from the most.
Joy Mali is an active blogger and shares extremely interesting financial management tips over the web that encourages people to check credit scores regularly & to build a working credit report for a happy financial life.