With the tax deadline falling on April 15, 2024, most people eligible for a tax refund should see those dollars hit their accounts soon. Wondering what to do with the extra cash? Here are four smart ways to use your tax refund for maximum impact on your household finances:

1. Pay down high-interest debt.

If you don’t need the money for immediate bills and essentials, consider using it to pay down debt. Maybe that’s credit card debt, student loans, an auto loan or another type of loan. Whatever the case may be, it’s never a bad idea to knock those balances down. We recommend paying down high-interest balances first for maximum impact.

Need more help reducing debt? Learn more about debt reduction strategies.

2. Save, save, save.

Taking extra cash and saving it is always a smart move. To start, everyone should aim to save an emergency fund that could cover three to six months of expenses. Unexpected expenses can arise at any time, and having a robust emergency fund can provide peace of mind.

Next, think about your future goals, such as a down payment on a home or dream vacation. Set aside some of your tax refund in a competitive-rate account, like a Money Market Account, to make faster progress toward your goals.

3. Boost retirement contributions.

Use your tax refund to boost your retirement savings by contributing to an Individual Retirement Account (IRA) or a workplace retirement plan like a 401(k). Investing your refund in these accounts can help you take advantage of compounding returns and build a more secure financial future. Time is your biggest ally when it comes to saving for retirement. Learn more about the value of compound interest.

4. Invest in yourself.

If you’re in a comfortable place with savings and debt, you might have additional financial flexibility with your refund. Our advice? Consider using your tax refund to invest in yourself through further education, skills training or personal development courses. Investing in your skills and knowledge can increase your earning potential and open up new opportunities for career advancement.

Put Your Tax Refund to Work for You

Remember, the key to making the most of your tax refund is to be intentional about how you use it. By prioritizing financial stability, debt reduction and long-term goals, you can turn your tax refund into a valuable tool for building a brighter financial future.

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