Spend It or Save It?

We are officially in the middle of tax season, meaning it is time for you to plan how to spend your tax return. If you don't need the money for essentials, you might have the urge to splurge and treat yourself. However, as you know, the wiser decision would be to reinvest that refund into something more long-term. So, do you spend it or save it? We will go over intelligent ways to reinvest and spend your annual tax return throughout this ALLIANCE Article.

Free Yourself Financially

Paying off any credit card debt is possibly the best investment you can make with your tax return. High-interest debt from credit cards can sometimes feel like an ever-growing ball and chain that you are dragging through life. Of course, credit card debt is not the only type of debt. Student loans, payday loans, home loans, auto loans, and the list goes on and on. Paying down your debt could save you a lot of money in interest payments down the road.

Build Your Savings

Sometimes the best way to leverage your money is to not spend it. Having cash on hand to pay for unexpected expenses can give you peace of mind. In a perfect world, you want an emergency fund to cover at least three months of must-pay living expenses. With that being said, simply having a few hundred dollars is better than having nothing. At minimum, try to aim for having at least $500 saved. This can help ensure that you will weather most of the minor emergencies. Squaring away a portion of your tax refund for this purpose could give you a lot more financial security.

Invest

Do you want to build wealth that will last your family generations? Then it's time to start investing. Nowadays, investing is easier than ever. With the prevalence of certificates and online brokers, it is straightforward to begin your investing journey. Invest your tax return and let it work for you. The money from your 2022 tax return and the money from future tax refunds can grow, and you can start down the path to financial independence.

There are so many different routes you could take to investing with varying levels of risk involved. Regardless of the decision you feel you should make, it is always wise to consult a financial adviser or seek advice from a trusted professional. ALLIANCE has a variety of ways you can invest your money, from money market and IRAs to certificates for members of all ages.

Invest in Yourself

Your financial health isn't the only thing you should be taking care of. Investing in yourself and making wise choices in your human capital can help propel your life forward. You are your biggest income-producing asset. Your knowledge, experience, and reputation for coming into the workplace every day and giving it your all is part of adding value to this asset.

Use your tax refund to pay for additional training, tuition, memberships, or other expenses that will drive your work forward. Paying for these services and memberships will pay off in the coming years in the form of a bigger paycheck and more job stability.

Invest in Your Community

Donating your money back into your community or towards a cause you care about can be a very fulfilling way to spend your tax refund. It benefits those in need and gives you the satisfaction of making a positive difference in other people's lives. In addition, you could always combine your charitable giving with extra volunteer work. Not only will this benefit your community, but it will also bring with it a potential deduction from next year's taxes.

Treat Yourself

There is nothing better than a little self-love and maybe that is the right financial choice for you. This can look different for everyone, depending on the size of your refund and your preferences. However, that tax money could be the perfect down payment you need for a new car or the closing costs on a new house. Whether it’s just a building block or the difference maker, spending your money on a valuable asset can be a good investment.

No matter how you want to use your tax return, ALLIANCE Credit Union can help you. We are here to help you build your nest egg or build your next home. Visit us at alliancecutx.com, call us at 806-798-5554 or stop by one of our branches to learn more. So, what’s the plan? Spend it or save it?