You fill out your tax returns and discover that a refund check is coming your way. What do you do, start shopping for an E-bike? Another option might be to put that money toward your future.
Here are five reasons why:
- Think bigger. Sure, an E-bike would be fun, but a new, more comfortable car or home might be more of a priority. Put the refund check into a savings account until you’re ready to buy. The bigger down payment you can make with the extra money will reduce your monthly payment, saving you money two ways – now and tomorrow.
- Avoid buyer’s regret. Two months after purchasing the E-bike, you have an emergency that’s going to cost you a lot out of pocket. It could be a major home or car repair, a big medical bill, or a limited opportunity to invest at a good return. Then, you might have regrets about splurging on that that two-wheeled “toy.”
- Grow your savings faster. When you deposit your check into a savings account or certificate of deposit, your interest earns interest. With rates trending higher, your interest earnings will grow faster.
- Retire when, where you want. The small sacrifice you make today will pay dividends when you’re older. Decades from now, you will have a bigger nest egg that might allow you to retire earlier or with a better lifestyle. Retirement savings vehicles like Individual Retirement Accounts (IRAs), 401(k)s and Roth IRAs grow faster than regular accounts because of their tax advantages.
- Be at peace with your monthly statement. Feel anxiety when opening your monthly statement arrives? With additional funds – that you didn’t expect – in your savings account, you can rest easier knowing that things are looking up in 2023.
Want to know other ways to make your refund check work for you? Read our Money Management Planner, available at Get Beyond Money, a free service to everyone.