You’ve finished your taxes and will receive a return. Congratulations! But hold on a minute — now’s not the time to begin plotting ways to spend that windfall. While it’s fun to splurge on a new TV or your rare sci-fi action figure collection, there are definitely more important ways to use your tax return. With a little planning, this money will yield benefits to support your long-term financial success. Here at Heights Finance, we encourage your economic empowerment. That’s why our team has outlined three ways to advance your financial future using your tax return.

1. Pay Off Your Debt

First things first! If you have any debt hanging over your head, you can use your tax return to tackle it. Target your high-interest debt that’s typically intertwined with your credit cards. Credit cards drag down your finances because their interest compounds every month, quickly adding up. When you focus on paying off your credit cards, you won’t end up forking out so much money in interest. This strategy will allow you to start saving towards a goal or invest in your future. Plus, once you pay down or even eliminate credit card debt, you’ll free up cash every month instead of having to pay that bill. So, by prioritizing this issue now, you’ll be able to focus on what’s really important down the line.

2. Start an Emergency Fund

Once you’ve paid off that high-interest debt, it’s time to consider starting an emergency fund. This handy stash of cash covers you in the event you lose your job, become too sick to work or have an unexpected expense such as a medical bill. Many banks and financial experts recommend having at least three months of income set aside for your emergency fund. That way if you become unemployed, you’ll have money to get by until you find a new job. An emergency fund also keeps you from taking on more debt. This means you won’t have to bust out your credit card when you have to pay for something unanticipated. Life throws curveballs, so it only makes sense to plan ahead.

3. Open a Savings Account

Finally, consider opening or adding to a savings account using your tax return. Now, a savings account is not an emergency fund. It’s an investment for your future. The purpose of a savings account is to increase your assets by saving money over time. This money could be used towards your child’s education or a home improvement project. Once this account is opened, you can start setting aside money every month by automating a portion of your paycheck to slide into your savings. You’ll be surprised how much your money will grow over time, making it so much easier to save.

When opening a savings account, it’s an excellent idea to find one that offers interest. By doing this, your bank will contribute a certain percentage to the money that’s already in your account. Even better, the more you put into your savings account, the more will come back to you in interest. This will encourage you to keep your money in the bank and continue adding to your savings.

Learning how to save money, even a small amount at a time, is a fantastic habit which improves your financial outlook.

Pave Your Way to Financial Success

It can be very tempting to look at your tax return money and spoil yourself a little. After all, you’ve earned it! And yes, you’ve worked hard for that money, but sometimes treating yourself means putting something aside instead of spending it. You may not see the benefits of your tax return right now, but your future self will thank you. Having money for an emergency, being free from credit card debt and saving for something special are all great things to work towards and will improve your financial health in the long run.

In the meantime, if you ever have any questions or need help, Heights Finance is here for you. From personal loans to debt consolidation, our services will keep you on the path to financial success. So, if you need a little extra money, don’t hesitate to drop by your friendly local branch.