Are you wondering what to do with your tax refund? Learn some options with Huntington Bank to help get the most out of your tax return this year.
Ways to Use Your Tax Refund
Expecting a tax refund this year? No matter the amount, it can be a struggle to figure out what to do with your return. Deciding on the best use for your tax refund depends on your financial situation and your future goals. At Huntington, we have tips and digital tools to help you make a good decision for saving, investing, or spending your tax refund. What should you do with your tax return? Here’s a few tips:
- Build Up an Emergency Fund
- Make a Payment on Your Debt
- Boost Your Retirement Fund
- Support Your Side Hustle
- Save it for a Rainy Day
Build Up an Emergency Fund
Whether it’s a car accident, job loss, or unexpected medical bill, financial emergencies can happen to anyone at any time. Unanticipated expenses can drastically cut into your budget and can affect your ability to keep up with monthly bills. Building and maintaining an emergency fund is one way to be better prepared when it comes to unexpected costs and disruptions to your budget. Huntington is here to help – with digital tools, emergency savings tips, and financial calculators.
Savings Goal Getter℠ - Make Real Progress Towards Your Savings Goals
Whether saving for the trip of a lifetime, or just putting money away for a rainy day, we can help. With Savings Goal Getter, you create your goals and track your progress to help you get there. You can add up to 10 savings goals, plus an emergency fund for each of your Huntington Savings and Money Market accounts. Learn more.
Make a Payment on Your Debt
Another option for using your tax refund is putting it toward paying off your debts. If you have debt from school loans, credit cards, or other sources, creating and sticking to a payment plan is key to maintaining your budget and avoiding accrued interest on your current account balances.
We can help you manage your debt with our Look Ahead Calendar℠, a Huntington tool that lets you see upcoming transactions and helps you plan for them. Organizing your payments into a calendar gives you a way to visualize your finances, anticipate large bills, track spending habits, and monitor your debt.
Your tax refund is a perfect opportunity to make a larger than usual payment on your debt. If you set aside a certain allowance every month to pay toward debt, adding your tax return in part or in full can help you pay off the amount due faster than planned. Even a small portion of your tax refund can help you get one step closer to paying off your debt.
Boost Your Retirement Fund
It’s never too early to plan for your retirement. Whether you have an employer-provided 401(k) plan, an individual retirement account (IRA), or both, contributing your tax return to a retirement fund can help boost your overall savings.
Keeping an eye on your retirement and adding extra cash with your tax refund can help support your long-term financial goals and can help you reach them faster. If you need help managing your retirement fund and figuring out the right contributions for you, Huntington has retirement calculators to help you navigate your finances step by step.
Support Your Side Hustle
A side hustle is an entrepreneurial hobby or extracurricular occupation that helps support your overall financial goals. Enjoy working on cars for a little extra cash? Your tax refund could help you pay for parts and other necessary tools. If knitting, embroidery, or crafting is more your style, some cash from your refund could help you afford more supplies and support an online store.
If you drive a car for a ride-sharing company or a delivery service, your tax refund could put an extra gallon of gas in your tank and fund an overdue tune up. No matter what kind of side hustle you prefer, the extra cash from a tax refund can help give your endeavors a boost and help you make more money in the long term.
Save it for a Rainy Day
Having a little extra cash for a rainy day can go a long way. If you set aside at least a portion of your tax refund in your piggy bank or savings account, you will be on your way to building up a fund for unexpected activities and purchases in the future. Whether it’s a new appliance, a family trip, or a celebratory dinner out on the town, a rainy-day fund can help you finance spur-of-the-moment expenses without overspending or dipping into your monthly budget.
Suggestions for What to Avoid with a Tax Refund
Even if you have a general plan for your tax refund, it can still be difficult to make the best decisions when that extra cash hits your wallet. Huntington has tips to help you avoid common mistakes when it comes to your tax refund.
Overspending & Splurging
Expecting a tax return can be exciting. It’s easy to fall into temptation and want to spend it all in one place on something luxurious. A new video game console, a fancy handbag, or a weekend getaway are all enticing options for your extra funds. However, you should consider your financial future and decide if spending your tax return will help you in the long run.
If you have debts to pay off, spending your tax refund on entertainment or material goods is likely not the wisest choice for your money. Overspending can cut into your budget and turn your tax refund from a benefit into a liability. Splurging might seem appealing and fun in the moment, but your debts and long-standing payments will still be due afterward.
Choose to spend your tax refund only on necessary purchases instead of impulse buys or shopping sprees. Do you have a small home improvement project that needs completed soon? Your tax return could go a long way toward paying for new furniture, a fixture, or can of paint. Are grocery bills stacking up every month? Your refund can help you stock up on bulk items or necessities without cutting into your budget. Spending wisely can help make your tax refund stretch a lot farther.
Want to know the moment your tax refund has been deposited so that you can put your plan into action? Sign up for our digital tool Huntington Heads Up® for real-time notifications† about your spending and savings. It keeps track of your account and sends automatic, customizable alerts to your email or phone so you can always stay informed.
If you need help making a plan for your savings, open a savings account with Huntington to take advantage of our tips and tools to help you figure out good uses for your tax return and organize your financial goals.