The tax season started late this year. However, IRS has started sending the refund checks to concerned people. It has been estimated that there are around 75% taxpayers who will receive refund checks this year. Also, the average check would be of around $3,000. Thus, that time of the year has come when everyone of us will have a make a choice amongst spending, saving or investing.
It has been estimated that there are around 42% people who plan to use the money to pay down debt and cover bills and 25% plan to save it. The rest want to splurge on it - go for a vacation or buy some expensive gadget. But financial advisers say something else. Here are some of their suggestions.
1. Prepaying the bills:
You will agree with me that there may be better uses for the cash rather than spending it on anything else. One of the best way to use your tax refund is to pre-pay your future bills. You will be able to prepay six months of car insurance bills or car loan payments. You will also be able to save the money for the home insurance bill you know is coming up in the next couple of months.
2. Re-balancing your financial portfolio:
The good news is that the stock market is at present nearly at five-years high! Thus, financial advisers are recommending the investors to re-balance their financial portfolios by selling stocks and using the proceeds to buy bonds. Moreover there may be some investors who might be able to re-balance without selling their stocks by using their refund money. If you want to rearrange your financial portfolio in the best possible way, then you should get in touch with a financial adviser.
3. Buying a vehicle:
If your vehicle is too old and needs repairs every other day, then you can use your tax refund to buy a new car. In the long run, it will help you save money which you are now paying for the repairs. The best part is that most of the lenders are offering quite low rates on car loans. Apart from this, car owners with existing car loans can refinance to get a low rate by using some of their refund cash to reduce the size of their loan. .
4. Improve your home:
You can invest the money that you receive as tax refunds to improve your home and increase its equity. It will also help you in preventing future damage to the property. You can even make your property energy efficient and then qualify for a residential energy tax credit which is going to expire at the end of this year. In order to get the maximum credit of $500, taxpayers need to make $5,000 in qualifying improvements to their stoves, insulation, roofs, water heaters, etc.