It has been three weeks since the Internal Revenue Service (IRS) kicked off the 2018 tax season by receiving and processing 2017 tax returns. Thus, for roughly 21 days, tax preparers have been working around-the-clock to ensure that tax returns have not only been submitted in full completion, but that eager North Americans receive their refund checks in a timely fashion. Moreover, with the average refund check slated to be close to $3,000 (an increase from the $2,782 average refund during the 2017 filing period), many Americans have begun outlining their financial goals long before the funds have been deposited into their accounts. Therefore, because I believe honing personal financial planning skills should be one of many fiscal goals in 2018, I offer smart money management tips to make your refund dollars stretch below:
Eliminating Existing Debt According to NerdWallet, for Americans in 2017, credit card debt climbed to a whopping $905 billion. Likewise, “the average household that carried credit card debt had a balance of $15,654. Household with any kind of debt owed $131, 431 (including mortgages).” Thus, if credit card debt hovers over your financial life like a dark cloud, consider using 25 to 50 percent of your tax refund to pay off existing balances, which includes mounting interest rates. Similarly, if student loan debt continues to plague your financial life, consider using a percentage of your refund to pay March, April, and May’s monthly balances so as to remain months ahead. Save, Save, and Save Some More Saving monthly is equivalent to maintaining a healthy diet -- while there are weeks when you maintain consistency, there will come a time when you reward yourself with a “cheat day”. Although there is nothing wrong with treating yourself, be cognizant of falling off track. As such, if you have been consistently saving 10 (or more) percent of your earnings monthly, you should not cringe at the idea of saving 15 percent of your refund. Remember, whether you are saving for a short or long-term goal, stashing untouchable funds allows you to move throughout the day with purpose, with your eyes on a prize. There’s A Leak In The Ceiling, and You Have Funds To Fix It! It is widely-known that a large percentage of Americans do not have adequate emergency funds. As a result, when unforeseen medical expenses, repair costs, and additional miscellaneous fees are incurred, many are left to scramble to pay the bill. However, you can begin amending this poor fiscal habit by using your refund to build a healthy emergency fund account. The goal is to be able to be prepared for the unexpected. Bonds, Dividends, Interest Rates, and Yields? Yes, It’s Time To Invest You have successfully paid off your credit card balance, established an emergency fund, and you’re now looking for another opportunity to diversify funds –look no further than investing. If you are unsure of how, and where, to start, let Investopedia help. Treat Yourself Whether your desire is to learn how to effectively code, master Photoshop, or immerse yourself in another language, consider utilizing a percentage of your refund to invest in yourself. Moreover, learning a new skill can aid in the personal and professional aspects of your life, ultimately improving it for the better.
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