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Yahoo
07-04-2025
- Business
- Yahoo
Tax Day Countdown: 4 Ways To Get Richer by Investing Your Tax Return Wisely
A tax refund can be a stepping stone to greater financial stability, whether you are funding a retirement account, paying off credit card debt or chipping away at your student loans. Even if the refund is a few hundred dollars or a larger windfall, investing it strategically can lead to long-term benefits. Filing for the 2024 tax year has a deadline just around the corner so it is now time to figure out what you want to do with your refund check. Find Out: Learn More: GOBankingRates spoke to Chad Faulkenberry, CFP, managing director of Journey Strategic Wealth, for advice on how to make the most of your refund after filing your return, no matter the size. According to Faulkenberry, small federal tax refunds — under $500 — are best used to start bolstering financial security. He stressed the importance of building an emergency fund before diving into investments. 'The first step is to ensure you have an emergency fund in place — ideally three to six months' worth of living expenses — before you begin investing,' he said. 'This provides a financial safety net, giving the security to invest for the long term and grow wealth.' For those without any savings, a refund as small as $500 can cover immediate essentials like a car repair or medical copay, offering a critical buffer against financial shocks. Even partial progress toward the ideal three to six months' worth of funds lays the groundwork for greater financial confidence. Read Next: When refunds are larger — several thousand dollars — Faulkenberry advised prioritizing high-interest debt repayment before investing. 'The balance between paying down debt and investing depends on the type of debt you have,' he said. High-interest consumer debt should be cleared first. For example, the Federal Reserve reports that the average credit card interest rate in the U.S. is over 20%, making it one of the costliest types of debt to carry. After eliminating high-interest debt, Faulkenberry encouraged focusing on savings strategies. For those with access to employer-sponsored 401(k) plans, taking full advantage of matching contributions is a smart move. The remaining funds can then be directed toward either additional investing such as in a retirement savings like a Roth IRA or traditional IRA or accelerating lower-interest debt repayment. For those new to investing, Faulkenberry acknowledged that the process can feel overwhelming, but it doesn't have to be, and there are options for both short-term stability and long-term growth — both of which can have tax advantages. 'Low-risk options like high-yield savings accounts, [certificates of deposit] and money market funds protect your principal but may not keep pace with inflation,' he said. These are best for short-term goals, such as building an emergency fund. For those looking to grow wealth over time, he recommended exchange-traded funds that track broad indexes, like the S&P 500. 'This offers greater potential for returns over time, along with diversification compared to buying individual stocks,' he said. A strong financial foundation, including an emergency fund, is key to weathering market downturns and staying invested for the long haul. According to Faulkenberry, refunds can also be used to create new income streams. Starting a side business or investing in skill-building opportunities are practical ways to transform a one-time refund into lasting financial growth. 'Refunds can fund certifications, courses or tools needed to boost earning potential or launch a small business,' he said. These investments often lead to compounding benefits, providing both immediate and long-term returns. The bottom line is that no matter your type of income, the size of a refund doesn't determine its impact. Strategic planning — whether for saving, investing or paying off debt — is the key to maximizing financial benefits, and even make them tax-deductible. One of most frequent mistakes people make with tax refunds is failing to plan. This often leads to impulsive spending that doesn't align with financial goals. 'The most common mistake people make when receiving a lump sum of money — whether it's a tax refund, bonus or inheritance — is not having a plan for how to use it,' Faulkenberry said. 'Having a clear plan acts as a roadmap to achieving financial freedom.' A thoughtful allocation of funds allows for balance. While enjoying some of the money is fine, securing a financial future should take priority. 'With the right strategy, a refund becomes more than extra cash — it's a stepping stone to a brighter financial future,' Faulkenberry said. Caitlyn Moorhead contributed to the reporting for this article. More From GOBankingRates 5 Luxury Cars That Will Have Massive Price Drops in Spring 2025 4 Things You Should Do if You Want To Retire Early 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth How Much Money Is Needed To Be Considered Middle Class in Every State? This article originally appeared on Tax Day Countdown: 4 Ways To Get Richer by Investing Your Tax Return Wisely Sign in to access your portfolio
Yahoo
20-03-2025
- Health
- Yahoo
OK Insurance Commissioner: Significant health insurance cost increases could be on the way
OKLAHOMA CITY (KFOR) — Oklahoma's Insurance Department Commissioner is warning Oklahomans enrolled in Affordable Care Act (ACA) Marketplace plans that they could soon be seeing a case of sticker shock. In a news release Wednesday, Mulready says his concerns are tied to uncertainty in Washington, D.C., over whether federal enhanced Advanced Premium Tax Credits will be extended by December. OKCPD officer who slammed Lich Vu to the ground has resigned, police say 'A permanent extension of the $338 billion in enhanced federal health insurance subsidies is looking more unlikely,' Mulready wrote, encouraging Oklahoma's leaders and citizens to be prepared for the consequences. Mulready wrote that at least 300,000 Oklahomans rely on the ACA Marketplace plans for coverage, and that enrollment spiked between 2021 and 2024. That number is more than 7% of Oklahomans who rely on the help to offset the monthly fees to keep their insurance. 'If these tax subsidies are not extended, Oklahomans are going to see such a price hike in their premiums,' said Haley Faulkenberry, Executive Director of the Oklahoma Association of Health Plans. In one example of the potential impact, Mulready says Oklahomans on the benchmark silver plan pay about $58 a month. If federal dollars aren't extended by December, Mulready says the cost could jump to $153. 'If something isn't done, I think it's going to affect generations to come on so many levels,' said Julie Repschlager, owner of Anew Dawn Counseling Services in Tulsa. Repschlager says her business currently sees around 500 clients, ranging in age from children to adults. 'There's so many disabled, elderly, and young moms,' said Repschlager when reflecting on what the tax credit change could impact. 'They can't go without help. They've got to get the help that they need.' Repschlager is worried a dramatic change could lead to a massive mental health decline for Oklahomans and believes that suicide rates and crime would spike as a result. Faulkenberry says warning signs aren't going ignored by state lawmakers. 'I think these discussions are taking place at the Oklahoma State Capitol,' said Faulkenberry. Faulkenberry praised legislative measures she believes are taking up the call to protect Oklahomans like House Bill 1161 by Rep. Mark Tedford (R-Jenks), Senate Bill 1096 by Sen. Avery Frix (R-Muskogee), and Senate Bill 1067 by Sen. Paul Rosino (R-Oklahoma City), that she says would minimize additional premium increases. Faulkenberry says the bills provide a safeguard by requiring a review of health insurance mandates before they impact affordability for Oklahomans. Faulkenberry also encouraged Oklahomans to contact their local and congressional leaders to call for action. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
