Receiving your tax return is exciting, especially if you want to boost your financial health. No matter how much you are expecting to receive from the IRS, there are strategic ways to invest your tax return to support your current and future finances. If you’re wondering how to invest your tax return this year, we’ve listed the top 8 ways you can put your tax return to good use.

8 Ways to Invest Your Tax Return

1. Open an Emergency Savings Account

Having a solid emergency fund can save you from a world of hurt when unexpected circumstances come around. Medical expenses, car repairs, and other unforeseen expenses can take a toll on your finances if you don’t have a savings safety net. Having a nest egg of three to six months of living expenses in savings is ideal. But anything put into savings is better than nothing. Open a savings account with Bank of Bozeman today and start contributing to your future now!

2. Pay Off Expensive Debt

This is one of the best ways to invest your tax return: paying off expensive debt. High-interest debts from credit cards, student loans, or personal loans can be a thorn in your side for years on end if not taken care of quickly. Tackling this debt bit by bit with your tax return can help you save a lot of money in the long run.

3. Open a Credit Card Account with a Low Rate

A low-rate credit card can be a great vehicle to refinance high-rate debt. Bank of Bozeman, for example, offers a credit card with a 5.55% rate.

4. Invest in Your Retirement

Your tax return could be a great opportunity to contribute more to your retirement plan. Whether it’s a 401(k) or IRA, increasing the amount you give by a couple of percentage points can help you maximize your retirement fund, especially if your company has matching opportunities.

5. Create a College Fund

If you’re a parent, setting up a college savings account can be a great way to invest in your child’s future. One option is to open a 529 college savings plan, which is where you contribute after-tax money and your money grows tax-free. As long as the money is used for education, you don’t owe taxes.

6. Invest in Your Home or Future Home

Homeowners and hopeful homeowners often find the best way to invest their tax refund is in home-related expenses. If you’re looking to buy a home, you can use invest your tax refund by increasing the downpayment on a house, which helps lower the amount you pay off later. Others may choose to use their tax refund to help pay off their mortgage or increase their home’s resale value with home improvements. Investing in your home can be a smart way to make the most out of your tax return.

7. Invest in the Stock Market

If you have your retirement fund in a solid place, purchasing stocks or mutual funds with your tax refund can potentially give you back more than you put in. Though the market can be volatile, historically the market has delivered better returns than Treasury bonds and savings accounts. Returns are not guaranteed, but investing can help you save for long-term goals like retirement.

8. Give a Gift

Making a charitable donation is a great way to invest your tax return in your community. Donations let you be part of organizations and causes you’re passionate about.

Invest in Your Future with Bank of Bozeman

If you’re wondering how to flip income tax money in your favor, check out our Bank of Bozeman personal finance resources. We cover a range of topics to support your financial health, including investing in your future. If you’re ready to open a savings account or credit card to start investing your tax return, apply for a Bank of Bozeman account today or give us a call at (406) 587-5626.