The Best Ways to Utilize Your Tax Return in 2021

For many of us, that tax return we get each year becomes a staple in our budget during that time. Whether we use us for basic needs, bills, or fun expenditures, we all need to take a moment to decide where to put that money this year. Here are some things to consider doing with your 2021 tax return.

Put it in A High-Yield Savings Account

Many of us wish that in 2020, we had saved more money or set aside our tax refund in our emergency fund. Whatever the case, if you can afford to save your tax refund, you should, or at least set aside part of it. To get the best bang for your buck, look into opening and maintaining a high-yield savings account. These savings accounts accrue sometimes up to 25 times the amount of an average account, meaning you get way more from the bank each year added to your account. Look into starting an account like this and continue to add to it. Your tax refund is a great way to jump-start a high-yield savings account.

Pay off Some Debt

Most of us can't pay off an entire owed balance with our tax return, but you can potentially eliminate or drastically lower one of your balances. Take a look at your outstanding balances that you're looking to pay off and apply your tax refund towards it.

Make this decision strategically. Look at interest rates and the amounts owed and decide where this money can best serve you in terms of your debt.

Put the Money Where It Counts

Another wise way to use your tax refund is to put that money into something worthwhile. Fix or upgrade your vehicle if necessary, or improve your home. Adding something like a security system to your home can actually lower your homeowners' insurance. Do an itinerary of where these things stand in your life, and consider whether your refund would be best used in an expenditure that improves those circumstances for you.

Speak to a Financial Advisor

If you're really torn about where to put your tax return dollars, speak to a financial advisor online or at your bank to start to consider this from a professional perspective. Maybe you want to begin saving to make investments or you want to explore micro-investing. The best person to ask is a personal finance expert who can look at your situation objectively and give the best advice.