About That Refund

Personal Finance

Nearly 122 million Americans received tax refunds amounting to more than $736.2 billion in 2020.1 Are you expecting a refund this year? If so, chances are you’ve already wondered ”What should I do with my refund?“

You are not alone. It’s common for tax refunds to be put into savings, used to pay down debt, spent on a major purchase, or even put towards a vacation—probably all things you’ve considered.

It’s important to remember this: a tax refund is not a bonus. It’s money the government borrowed from you for a while, interest free, and is now being returned. While paying down debt and planning a trip may be good ideas, here is another to consider for your refund.

Create an emergency fund.
It doesn’t sound exciting, but neither is not having money saved for an emergency, and going into debt because of it. By saving your refund for an unexpected financial event, you can be more prepared for sudden expenses. Consider placing the money where you can earn interest, allowing the value to increase over time, like an AGFinancial Demand Certificate.

The past two years have shown us how life can change literally overnight, and in the most unimaginable ways. An emergency fund may be a stark contrast to the beach photos posted on social media feeds, but it may be more appropriate for your financial situation than having your toes in the sand.

1IRS Fiscal Year 2020

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Not FDIC or SIPC Insured. Not a Bank Deposit. No AGFinancial Guarantee.

This information is not legal or tax advice. Information is from sources deemed reliable. Information is subject to error, omission, withdrawal, or change. Contact your own tax advisor before taking any action that would have a tax consequence.

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