5 Wise Uses for This Year’s Tax Refund
As tempting as it may be to splurge on a tropical vacation or a new flat-screen TV, this year’s tax refund will go so much further if you put it into savings or use it to update your home. You could certainly use this money to pamper yourself or take a well-deserved trip, but you’ll thank yourself later if you put it to better use.
Below, Suzi Farajiani Real Estate shares five smarter uses for this year’s tax refund, from starting a home emergency fund to furthering your education.
1. Start a Home Emergency Fund
You never know when a home emergency will arise, such as a leaky basement, broken water heater or air conditioning unit, or clogged drain. And when it happens, it’s a good idea to have some money saved to cover the cost of any repairs or replacements — as home repair expenses could range from $100 to upwards of $14,000.
A good rule of thumb is to put around one percent of your home’s value into savings each year, which would be about $3,600 for a home worth $360,000. You can always set aside some money each month if your tax refund isn’t large enough to cover the entire amount of your annual home emergency fund.
2. Improve Your Home’s Energy Efficiency
Improving your home’s energy efficiency can save you thousands of dollars on heating and cooling expenses in the long run, and it can also help to reduce your carbon footprint, boost your home’s value, and make your house a healthier place to live. So why not use this year’s tax refund to install energy-efficient windows, doors, and light bulbs; switch to a tankless water heater; and install solar panels on your home?
3. Expand Your Outdoor Space
Upgrading your outdoor space isn’t just a luxury: In the age of COVID-19, it’s also essential. Put your tax refund to good use by installing a deck or patio, building an outdoor kitchen, adding a hot tub or sauna, or upgrading your outdoor furniture so you have plenty of places to lounge on your own or with guests.
Some other ways to expand your outdoor space include:
Adding more landscape lighting so you can relax outdoors when the sun goes down.
Installing a fire pit with plenty of comfortable seating.
Building a patio roof or pergola.
Setting up an outdoor movie theater.
4. Save for a Down Payment on a New Home
If you’ve been thinking about buying a new house, this year’s tax refund could also go toward a down payment on your home purchase. The amount of your down payment will depend on the price of the home you wish to purchase, the terms of your loan, and your budget, but most loans require a down payment of between one and 20 percent. As an exception, USDA and VA loans require no money down.
5. Further Your Education
As an alternative to using your tax refund to upgrade your home or save for emergency home repairs, you might prefer to use the money to further your education and improve your career. You could use your refund to take a few college courses or enroll in an online degree program, whether you’re interested in expanding your knowledge of business, education, healthcare, or information technology (IT).
An online degree in information technology, for instance, can be completed in just two and a half years — and you could increase your annual salary by an average of $12,300 within two years of graduation. Just make sure the school you’re enrolling in is accredited, fits your busy schedule, and offers affordable tuition rates.
Your Tax Refund Can Go So Much Further
Whether you’re getting a tax refund of $200, $1,500, or $3,500, this money will go so much further if you use it to invest in your home or education. Energy-efficient light bulbs and home repairs may not be as exciting as splurging on a new iPhone or smart TV, but they’ll benefit you (and your wallet) a whole lot more in the long run.
Ready to buy your dream Los Angeles home? Or are you preparing to sell your current home? Contact real estate agent Suzi Farajiani at 805-630-3894 or by sending an email.
Article Submission by Julian Lane