How To Increase Your Tax Refund
It's no secret that tax refunds are one of the most exciting things to look forward to each year. This financial reward allows us the freedom to pay off bills, book a vacation, or splurge on a big purchase. And while those are all great things - we're here to give you an idea on how to increase your tax refund to reward yourself even more. According to Nerdwallet, “a taxpayer who received a $3,000 refund in 2010, invested it and earned a 6% average annualized return would have more than $5,000 in that investment account today.” As you can see, being dedicated and patient with your tax refund pays off in the long run. Here, we break down a few different ways you can use the money to benefit your future.
1. Place It in a Share Certificate Account
Much like a Certificate of Deposit with a bank, a Share Certificate with a credit union acts as a high-yield savings accounts; in exchange, you leave your money in the account for a specified amount of time, typically ranging from three months to five years. The return is a much higher rate than regular savings accounts, so it's a good solution for those of you who can set aside your tax refund for an extended amount of time to earn more from it. Learn more about a Share Certificate here.
2. Contribute to Your Retirement
Whether you are 25 years old or 55 years old, your retirement is an important part of your financial future. And, the earlier you save, the more you’ll have in retirement due to compound interest. Putting your tax refund into a retirement account — such as a 401(k) through your employer, a traditional IRA, or a Roth IRA – will help boost your future financial security. Plus, you may be able to deduct some of these contributions in next year’s tax return.
3. Use it to Jump Start Your Journey to Becoming a Millionaire
But seriously. Education First even has a saving calculator to help you see how soon you can become a millionaire. Enter your tax refund, plus your current monthly savings, and see the annual results that will lead you to becoming a millionaire!
These three simple ideas will help you to use your tax refund to benefit your financial future - rather than spending it all at once. If you have any questions, give us a call at (409) 898-3770 and a representative would be glad to assist you.