(BPT) - A tax refund is a welcome influx of cash that folks sometimes use for fun purchases or indulgences. However, this year, research shows that consumers feel more economic pressure and are using their tax refund for more practical purchases that reduce stress, improve daily life and provide predictable monthly costs.
According to a survey commissioned by Metro by T-Mobile, 70% of adults say they follow a budget, but most say expenses are harder to manage this year. Given this finding, it should come as no surprise that 59% of adults plan to use their tax refund to pay off debt or cover essentials like rent, utilities or transportation costs.
If you want to use your tax refund wisely to set yourself up for success this year, check out these four smart ways to manage that money.
Start or add to an emergency fund for peace of mind
If an unforeseen circumstance like a medical emergency, major car repairs or job loss were to happen, would you have enough money to cushion the financial blow? You can gift yourself peace of mind by using your tax refund to start or add to an emergency fund.
An emergency fund allows you to cover finances from your own reserves instead of pulling from your regular savings, taking out short-term, high-interest loans or increasing your credit card debt. Aim to save at least six months' worth of living expenses. You don't have to have that amount right away, but your tax refund is a great way to work toward this goal, giving you peace of mind and financial stability.
Prepay bills for savings and predictability
Budgeting can be challenging when monthly bills fluctuate. However, you can add more predictability to your financial plan — and even save money — by prepaying for services.
Take your phone plan, for example. Instead of dealing with stressful monthly payments, you can prepay for your wireless plan and lock in significant savings. This tax season, look into switching to a prepaid phone plan like Metro by T-Mobile's new multi-month prepaid option.
By paying $120 upfront for six months of wireless, you'll get 50% off Metro's $40 a month rate plan. That works out to just $20 a month when customers bring their own phone, taxes and fees included. The best part? You can keep your number or get a new one, you won't have to pay activation fees, and you'll have access to unlimited high-speed data on America's Best Network. To learn more, visit MetroByT-Mobile.com or visit a Metro store near you.
Bonus! Switching to a Metro plan can save you money and even get you a new phone. If you're a new customer who switches or signs up for Metro's $40/month plan, you'll have the opportunity to get a new Samsung Galaxy A17 for free.
Tackle home improvement projects that pay off
Have you been putting off home improvement projects? Now's the time to put your tax refund to work by investing in home repairs and enhancements that can make your daily life easier and perhaps even increase your home's resale value.
For example, if you have an old fridge that's on its last legs, replace it with an energy-efficient model. Not only will this help lower your energy bill, but it can also beautify your kitchen and help you command a higher price if you were to sell your home. Or, if you have a leaky faucet, you can get it fixed — potentially avoiding a larger and costlier repair in the future — and swap out the hardware for a more modern, clean look.
There are also plenty of home improvement projects that are practical and fun! Consider giving your bedroom or living room a fresh coat of paint in your favorite color, purchasing new furniture to switch up your interior design or changing lighting fixtures for a cozier look and feel.
Save for a big purchase down the road
Are you planning to buy a car, get married or visit family abroad? Don't rely solely on loans and credit to make these big purchases possible. Set aside some or all of your tax refund to put toward these large expenses.
Saving for a big purchase is an exercise in delayed gratification, but one that can pay off big time. Using your tax refund as a down payment for a car can help lower your monthly loan amount and help you save on interest. Taking your tax refund and booking plane tickets early can allow you to lock in a lower price.
All in all, saving money for bigger purchases has the potential to save you money down the line, relieving financial stress and ultimately giving you something to look forward to.
Make the most of your tax refund
You've worked hard for your tax refund. Now it's time to put it to work for you. Let these examples inspire you to make smart choices so you can use your tax refund to improve your life.
