As tax time approaches help your members make smart financial decisions. I don’t know about you, but sometimes that tax refund feels like its burning a hole in my pocket. Initially I think manicures and lobster dinners; though, I know I should use the money for a smarter purpose. Without any pre-determined plan, it is gone before I know it. Help your members save and spend wisely with three super smart ways to use their tax refunds in 2019:
- Get out of Debt
- Create an Emergency Fund
- Establish Predicted Spending Reserves
Aside from being simply smarter uses of their tax refunds, these three financial planning heavy hitters will instill healthy spending and saving habits for your members.
1. Get Out of Debt
Nearly 30% of people indicate paying off debt is a top financial priority for 2019. The first step to cut debt out: pump the breaks on spending habits. Cut out non-essential spending like the daily latte, monthly unused memberships, and weekly dining out. Step two, track progress as the payments are made. Use a debt pay off calculator to determine a plan to pay off debt. Then check off each payment as they are made. Finally, a tax refund can be transferred into a reloadable everyday spend prepaid card, a product available from LSC. Storing the tax refund money in an everyday spend prepaid card allows members to make secure payments toward their debt.
2. Create an Emergency Fund
Experts agree an emergency fund is critical for financial security. Depending on member needs, the fund should be anywhere from three to nine months of expenses. Separating the emergency fund into its own account will prevent the money from being used for everyday expenses. Creating an emergency fund in a high yield credit union savings account is smart. Members can use tax refunds to jump start the emergency fund. Depending on their individual needs, establish a plan for how much and how frequently deposits to the account should be made to reach the goal.
3. Establish Predicted Spending Reserves
Predicted spending reserves are designed for annual, reoccurring expenditures that should be planned for. Unlike monthly living expenses, groceries and utilities, these are events that occur every year: birthdays, anniversaries, back-to-school and holiday shopping. Often, because these events sneak up they can disturb the financial stability we want for our members. Tax time is an awesome opportunity to establish predicted spending reserves. Tax refunds can be deposited into a credit union checking account so the money is easily accessible when Grandma’s birthday rolls around.
Bring these super smart ways to use a tax refund to the attention of your members before tax refunds begin to be dispersed. Suggest smart use of their tax refunds to get out of debt, create an emergency fund, or establish predicted spending reserves. Whether you suggest an everyday spend card, high-yield savings account, or checking account your members will feel confident that their credit union has their back.