Using Your Tax Refund to Help Build Financial Security
Most years it seems like my tax refund is spent before I even get it. Car repairs, medical expenses, unexpected bills–there is so often something that it needs to go toward. If you have funds left over though, or are looking for something to do with yours it could be a much-needed financial boost. With interest rate concerns, concerns about a possible recession, and the uncertainty of seasonal work, it could be a great year to think strategically about how you plan on using your tax refund. It could be a great way to start building long-term financial stability and preparing for economic challenges that may arise for you later.

Start or Strengthen A Rainy Day Fund
Having an emergency fund to help cover unexpected expenses like car repairs, medical bills, or home maintenance could be a life saver later on down the road. Financial experts recommend saving at least three to six months’ worth of living expenses saved. This is a pretty lofty goal for many of us, but starting with a few hundred dollars from your tax refund could make a big difference.

Pay Off High-Interest Debt
Carrying credit card or unsecured loan debt can be very expensive. Utilizing funds from your tax refund to pay off high-interest debt can save your money and help to improve your credit rating as well. This can also make it easier to qualify for better financial opportunities in the future, should the need arise.

Plan Ahead for Seasonal Expenses
Living in Michigan, expenses can change with the season. Higher utility bills in the winter, or reduced income due to seasonal employment is not uncommon. If your budget fluctuates throughout the year consider setting aside a portion of your refund to use during the leaner months. If it helps your budgeting, consider opening a separate sub-savings account to keep these funds apart from other savings.

Invest in Maintenance and Repairs
A reliable vehicle is essential, as is having your home in good condition. Is there maintenance or a minor repair that you’ve been putting off because you could not justify the expenditure? Consider investing in those things with your tax refund. Spending a bit on them now could mean big savings in the long run if you’re able to avoid a bigger problem later.

Treat Yourself
Yes for real! It’s not necessary to use absolutely all of your tax refund responsibly. Improving your happiness and quality of life is important too! And if you expect yourself to only do the responsible thing you may just be setting yourself up for failure. Consider budgeting what amount you will use to improve your financial security and what you are free to splurge with.

Need Some Help?
We at SAFCU would be happy to help with any questions you may have about improving your financial security. We have financial counselors on staff at all three branches to assist you. Give us a call at 231-627-3145, or make an appointment on our home page to stop by and chat.