HONOLULU (KHON2) — Tax day is coming up on April 15, and if you are one of the lucky ones to receive a tax refund you may be wondering – what is the wisest way to use it?
“What you do depends on your current situation, but there are a few things to consider,” said Nohonani Leslie, First Hawaiian Bank vice president and Aina Haina Banking Center manager.
- Build or boost your emergency fund. It’s good to have 3-6 months of expenses saved to cover unexpected costs like car repairs, fixing a leaky roof or medical bills.
- Pay down high interest credit card debt or high interest loans. Using your refund can save you a lot in interest over time.
- Invest in the future. Consider opening a retirement account like a Roth IRA or stocks for long-term growth.
“You may also want to think ahead about upcoming expenses. For example, you could use the refund to help pay for summer travel or for insurance premiums that are coming up. And it’s okay to use some of it to treat yourself to something fun. A simple rule of thumb can be – 50% for financial goals like savings or paying debt, 30% for upcoming expenses and 20% for fun,” Leslie said.
It’s good to have a plan before you receive your refund, so you know what you are going to do with the money ahead of time…