Does the idea of a tax refund or stimulus cash have you dreaming of sunny beaches and shiny big-screen TVs? Before you dream it all away, run down this checklist. It may be just the personal relief package you need:
- Cover the basics – Make sure to take care of the most important things first:
- Are you working? If not, hang on to that cash to cover the bills until you've got a job again.
- Living with high-interest debt? Pay it down or pay it off. Bye-bye, interest charges!
- Have an emergency fund? Ballpark 3 to 6 months of expenses. Even $500 could cover a surprise car repair so you're not running up a credit card.
- Stimulate your cash – You could put extra stimulus cash in a place where it can help build for the future. It may only be a few extra bucks a paycheck, but a little can go a long way. Most employers allow direct deposits to at least three accounts. So, arrange to have pre-set direct deposits sent to your:
- 401(k) or 403(b)
- Investment account
- Kid's college fund
- Rainy day fund
- Revisit your investing principles – With stocks hitting historic lows, consider investing. Use your tax refund as an opportunity to:
- Rebalance your portfolio more affordably. Instead of a sell/buy action, just buy more of any under-represented investment you might already have.
- Keep diversifying – There's no need to raise money by selling an investment while it's low. Just buy the stock or fund you've been eyeing.
If you've been doing without that "found" money all this time, you won't even miss it. So why not use the extra cash to invest in the future?
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