The average American receives $3,000 when they file their taxes, which is a substantial boost in cash to start the year. But spending that tax refund money wisely isn’t always easy, especially for cash-strapped millennials and college graduates subsisting on Ramen and hardboiled eggs. While it’s true that $3k could buy a few years’ worth of packaged cardboard-like noodles, it’s not the smartest decision.
Instead of venturing down the noodle aisle with your 2018 tax return check in hand, put that money into something more substantial and worth your while. Here are five smarter choices.
Start an Emergency Fund
Did you know that less than 40% of Americans have $1,000 saved to cover an emergency? This sobering stat shouldn’t lull you into a sense of camaraderie with 160 million of your fellow countrymen and women. Emergencies can happen at the drop of a hat, so it’s important to be as prepared as possible for the inevitable.
Rather than relying on a credit card or borrowing cash from your third cousin in the future, pool your tax return into a savings account, preferably a high-yield account. When that car breakdown happens, you won’t be left in a lurch. Even after taking advantage of local auto service specials and tire coupons, those car repairs can put you in the financial hole. Safeguard yourself from those expenses by keeping a rainy-day fund intact.
Pay Off College Loan Principals
College grads know how fun it is to pay off student loans. After a decade or more of on-time payments, they’ll be free of debt! But you can cut down your student loan balance by sending a handful of additional payments throughout the year—all funded by your tax return. To ensure you’re paying off your college loan principal and not the interest, instruct your lender on where to apply the payments. Experts believe that the best approach is to pay off high-interest loans first while also confirming payments are being applied correctly each month.
Buy New Tires
Once your car’s odometer hit 100,000 miles, you may have hyperventilated at the thought of replacing it. But it remains your confident road warrior to this very day, chugging along like nothing can stop it. Can you say the same about its tires? Bald or worn tires are a big no-no. They are dangerous, negatively affect fuel efficiency, and can be replaced easily with even a modest tax refund.
Should you need a new set of car tires in NJ, take a trip to our Nissan World of Red Bank service center. We can order and install tires for you, no problem. Once our service techs are finished, you’ll probably even have tax refund money left to put into that savings account.
Attract Future Employers
Your resume should be beefed up annually, but if you don’t have a website or online portfolio to show off your skills, you may be missing out on some potential employment opportunities. Here are a few cheap and free ways to get your name out there:
- Buy a domain and web hosting for under $100 a year.
- Take an online course on web design, which you can pay for or find for free on sites like org.
- Invest in graphic design software if you plan on creating site graphics and logos.
- Hire a web designer to do all the heavy lifting, which may cost a substantial amount.
- Gather all your portfolio samples and add them to a digital gallery.
- Network with past colleagues, co-workers, peers, and classmates.
- Use your tax refund to buy new clothes. (First impressions matter, right?)
Make a Down Payment on a Used Car
If your road warrior finally runs into the ground, it makes sense to use your tax refund as a down payment for another used car. In fact, there’s perhaps no smarter way to spend your tax return than by purchasing a pre-owned vehicle from a trusted used car lot. Just trade in your beater, cash your tax check, and start test driving! It couldn’t be easier.
Once you get paid by Uncle Sam, bring that tax refund into our used Nissan dealership in Red Bank to secure auto financing. Our inventory of used cars for sale is immense and we offer top dollar for trade-ins, so stop by our Red Bank car dealership at 120 Newman Springs Road to begin shopping.