After working hard all year, receiving your tax refund can feel like a long-awaited bonus. While you may be tempted to splurge your newly acquired funds on something frivolous, it’s smart to think about your future financial status. If you’re looking to get more out of your tax refund, consider the following four tips.

How to Make the Most of Your Tax Refund

1. Pay Down Debts

Whether it’s a credit card or auto loan, outstanding debt can impact your overall credit score and financial outlook. Using your tax refund to pay down existing debts will lower your debt-to-income ratio and make it easier for you to save for the future. Focus on any loans or credit cards with an interest rate of over 10% to start.

2. Start an Emergency Fund

An emergency fund can protect you financially when the unexpected happens. Ideally, you want to have enough to cover at least three to six months’ worth of income, and your tax refund can provide a significant portion. If you have a medical emergency or need to replace an expensive component of your car, you can use these funds instead of your regular income.

3. Invest Your Money

If you’re looking to grow your tax refund, invest in stocks. You can work with a personal investor to build your portfolio and determine your risk tolerance. Using your return presents fewer risks because it’s extra money, leaving your regular income safely in the bank.

4.  Make Home Improvements

Several systems in your home can be costly to repair, whether it’s your electrical wiring or HVAC. Using your refund to replace aging or malfunctioning systems can save you money in the long run, particularly if you upgrade to eco-friendly options.  

Whether you need financial advice or assistance filing your tax return, trust the professionals at Tudor Wilson & Associates, CPAs, in Honolulu, HI. Established more than 20 years ago, this team provides the guidance you need to build your financial future, from estate planning to record keeping. To learn more about their services, visit them online or call (808) 592-2000.