- Prepare for an emergency - According to a survey conducted by Bankrate.com, 29% of Americans do not have adequate emergency savings. The recommended amount is roughly the equivalent of 6 months worth of expenses. While it might seem like a luxury to some, it can provide the needed resources should an unexpected situation keep you from collecting an income for an extended period of time.
- Pay off debt – A study conducted by Nerdwallet.com found that in Q4 of 2015, the average American had a revolving credit card debt of $15,762 and an overall household debt of $130,922. This staggering figure suggests that paying down debt with a tax return is a very good idea. Pay the highest interest debts first and then continue to chip away at the rest. This simple step is a great way to gain some much needed breathing room and peace-of-mind.
- Save it – Retirement age comes quicker that most people want to admit. In an article published by The Guardian, it was reported that over half (55%) of American are unprepared for retirement. Putting your tax return money into an investment tool, will help you create the nest egg you need to retire comfortable. It is recommended to seek the help of a qualified financial planner to ensure that you are putting your money into the best possible investment solutions for your needs.
- Plan for your kid’s future – Like retirement age, a child’s high school graduation will also come sooner that you can imagine as well. This means helping them realize the next steps in their lives is not far behind. The current US student debt load is nearly $1.3 trillion with the average debt of the college graduating class of 2016 at $37,172. These frightening statistics make putting a little bit of that tax return money into a college savings plan an excellent option.
Tuesday, May 24, 2016
They say there are only two things for sure in life – death and taxes. If you count yourself among those lucky enough to get a refund, the taxes part might actually be something that you look forward to each year. But what should you do once you get your tax return? Here are some ideas:
Looking for additional ways to utilize your tax return money? Talk to the banking experts at McHenry Savings Bank! We offer a number of services including investment tips, financial tools and fiscal advice that you can trust.
Tuesday, May 3, 2016
The deadline for filing your taxes was April 18th, so there’s a good chance that by now you’ve received your state and federal tax returns. If you read our last blog, hopefully you were able to get a bigger tax return. So how can you make that money go further now that you’ve got it? Here are our tips on how to make the most of your tax refund:
- Save for emergencies. Open or add to a high-yield savings account that serves as an emergency or “rainy day” fund.
- Pay off debt. Pay down existing balances either by applying your refund to your higher-interest loans or using it to pay off smaller debts.
- Put it toward a down payment. It’s hard to save up for a down payment on a house or vehicle. Save your tax refund to use as or put toward a needed down payment.
- Invest in your home. Put your tax refund toward home improvements. This is considered an investment that will pay you back down the line by increasing the value of your home.
In addition to stretching your tax refund, spring is a great time to refresh your finances. Reevaluating your expenses and budget now can help you manage your money for the rest of the year. Here are three great financial “spring cleaning” tips from the American Bankers Association:
- Evaluate and pay down debt. Take a look at how much you owe and what you are paying in interest. If there are better rates available now, consider requesting a lower credit card interest rate or refinancing your mortgage. Begin paying off your existing debt, either by chipping away at larger, higher interest loans or by eliminating smaller debt first.
- Review your budget. Update your budget to reflect any changes in your financial situation that may have come up over the past year. Determine what expenses demand the most money and identify areas where you can realistically cut back. Develop a strategy for spending and saving and stick to it.
- Check your credit report. Every year, you get one free credit report from each of the three bureaus. Take advantage of these free reports and check them for any possible errors. Mistakes can drag down your score and prevent you from getting a loan, or cause you to pay a higher than necessary interest rate.
Being smart with your tax refund money and refreshing your finances now will alleviate potential headaches when it comes to managing your money for the remainder of the year. At McHenry Savings Bank, we’re pleased to provide mobile banking and funds management tools to make it even easier on you! With our mobile app, you can check your balances, establish alerts, and transfer funds - all on the go! For more information or to see what else McHenry Savings Bank can do for you, don’t hesitate to give us a call or drop by one of our locations.