I can practically hear the collective sigh of relief; we made it through another round of gathering receipts, sweating over deductions, and (hopefully) celebrating a nice refund.
Still, it’s important to make the most of this influx of funds and set us up for long-term success, don’t you think?
First Things First, Don’t Toss Those Receipts Yet!
While you might be tempted to throw all those receipts and tax documents in the recycling bin, the IRS recommends keeping tax records for at least three years, in case of an audit.
It would do you good to scan them digitally or store them securely in a labeled folder.
Evaluate Your Financial Situation.
Now that the tax dust has settled, take a step back and assess your current financial standing. Are there outstanding debts or bills that need to be addressed? Did you receive a refund, or do you owe money? What could you have missed in the rush?
There’s no more opportune time to take a comprehensive look at your overall financial health. You can never be too careful with these things, right?
Pay Down Debt
This might not be the most exciting option, but it’s a powerful one.
High-interest debt like credit cards can feel like a bottomless pit. Throwing your refund at it can make a serious dent and free up more money in your pocket every month.
Build An Emergency Fund
Life can be unpredictable — as you may have well experienced in the last couple of weeks.
And so, if you haven’t already gotten the cue, aim to set aside at least three to six months’ worth of living expenses in a readily accessible savings account. This buffer can help you weather any storms without derailing your long-term plans.
Maybe Treat Yourself (Responsibly)
While it’s essential to prioritize long-term financial goals, don’t forget to enjoy the fruits of your labor.
Set aside a modest portion of your refund for a well-deserved treat or experience that brings you joy. However, be mindful not to overspend or indulge in excessive luxuries that could jeopardize your financial stability.
The tax season is over, but your financial journey is far from finished.
We’re always rooting for you, every step of this journey.