We are in the middle of tax refund and stimulus check season and millions of Americans are expecting a tax refund. In fact, according to CNBC, over 130 million people have already received a stimulus check.
If you received (or expect to receive) a stimulus check or tax refund, consider using your check to grow your income. However, if you are not current on your bills or expect to have challenges paying next month’s bills, especially bills related to your physical security and well-being like food, shelter, utilities, etc., then use your stimulus check to pay past due or upcoming bills.
Now, if you’re ready to start investing, the first thing to do is to write down why you desire to grow your income and what it will do for you and your family. This will be the guiding principle that helps you choose which of these 4 strategies will work for you and advance the goals you have for your family and also help you stay the course if you run into obstacles.
1. Invest
One of the biggest mistakes I believe parents make is they don’t think they have the money to start investing. Between school activities, bills, tuition, etc. sometimes they don’t think there is (or there may not be) anything leftover to invest. Therefore, using your tax refund or stimulus check will provide you with the extra income you can use to get started with investing.
Additionally, this is a great opportunity to help your children start investing. Consider starting or growing an investment portfolio. There are a number of different vehicles you can use like 529 College Savings plans, UGMA (Uniform Gift to Minors Act), or UTMA (Uniform Transfer to Minors Act) accounts. Depending on your children’s age, you can even enroll them in an investment course or teach them how to manage their own investment portfolio – and then let them do it.
2. Save for a down payment to purchase a rental property or getting involved in real estate investing
If real estate investing or ownership of rental properties is a goal of yours, then use your stimulus check to move closer to that goal. For example, save towards purchasing a rental property or get started in another form of real estate investing. This will help generate passive income for your family which will allow you to further work on financial goals, create more family experiences, and provide more financial peace.
3. Pay off high-interest debt
You may be wondering why I included paying off high-interest debt in the grow your income post. I did this because paying off high-interest debt will save tons of money and allow you to keep more of your hard-earned money.
If you have credit card payments, especially those high-interest credit cards that carry a 25 – 27% interest rate, prioritize paying them off. Those cards are costing you a lot of money. Therefore, when you begin to pay off your credit card debt, not only will you save money on future interest payments, it’ll also help improve your credit score which will save even more.
4. Start a business
Do you have an idea for a business? If you have a business idea, use your stimulus or tax refund check as seed money to start your business. Starting a business allows you to serve others, make a difference while growing your income, and even gain favorable tax benefits. If you desire to exit your full-time job, starting your business can position you to leave your job, which is a definite benefit.
However, businesses require money to start. Therefore, consider using your tax refund or stimulus check to help fund those business startup costs. This allows you to continue to use the income from your full-time job to pay bills and other expenses that come up, make progress on financial goals, and do fun activities as a family.
Hopefully these strategies have helped you think of ways to use your stimulus check or tax refund to grow your income. Which strategy will you use? Leave a comment to let me know!
