Spring is upon us again. Green shoots push through the soil, warm winds are stirring the budding trees, birds chirp annoyingly outside your window when it’s way too early to get up… But that’s not what you’re thinking about. You’re getting a hefty tax refund this year! It’s the most important event of the season. You’ll see plenty of commercials and other ads encouraging you to drop it all on a new TV or a down payment on a car, but what if, instead of treating yourself to a new purchase you don’t really need, you could use your refund to build wealth? Here are three easy options for getting the most out of your refund check for the long term.

1. Get out of debt and/or save your tax refund

This will always be our first piece of advice because debt will almost always cost you money. Technically, there are exceptions to this, as a loan with a tiny interest rate can be backed by your own savings account with a greater one. But that’s an example of a debt you control. Most American debt does not fall under this category and is instead made up of costly credit card or car debt with high-interest rates. You’ll want to get out of this as quickly as possible, and a hefty refund check can go a long way toward achieving this.

Perhaps you’re already out of debt, but you don’t have anything in savings. The best way to stay out of debt is to establish an emergency fund. This way you won’t have to whip out the credit card whenever you face an unexpected expense. We recommend saving up the equivalent of three months of your income, so you’re covered for a while if you lose your job. That’s also a sizeable enough fund to buy a new car or take care of a substantial house expense. You probably won’t get that much with your tax refund, and if you do, the IRS might come knocking on your door. Still, it’s a good place to start.

2. Get a CD with it

Perhaps you already have an emergency fund, but you’d still prefer to save that money, investing it for the future. One of the easiest ways to invest is to get a certificate of deposit, or CD, from your bank. Our parent company, Lead Bank, offers CDs. The basic idea is that you promise to leave a set sum of money in your account for a set period of time, from three months to 5 years. Because the bank knows you won’t withdraw those funds, it can offer you a higher interest rate on that sum. The longer your term of deposit, the more money you’ll make on interest. However, if you choose to withdraw that money early, you could be penalized. 

The beauty of getting a CD with your tax refund is that you can turn it into an annual profit cycle. Get a three-year CD with your tax refund in year one. Do the same thing for year two, and again in year three. But at refund time in the third year, you can withdraw that CD, with a hefty chunk of interest attached. You deposit the year three refund, but in the same bank visit, you can withdraw the refund from year one, only now it will be much larger. With patience and discipline, your regular, yearly tax refund will grow just from sitting.

3. Get some new skills that can make you more money in the long run

Everyone has a dream. You might already be working your dream job, or there might still be some obstacles in your way. One common obstacle is education. You probably know that you can’t go back to college on a single tax refund. But education isn’t always a fresh master’s degree. There are now countless online and local education courses, focused and effective, that cover specific skills you may need to get where you want to be.

Maybe that means getting the skills needed to advance at your company. Maybe you need to learn something before you can start your own business. Maybe you need materials for an artistic endeavor. Whatever your dreams, a substantial tax refund can go a long way to getting you there. Many online training courses are much cheaper than a semester of college, and you can complete them from home. Or perhaps your city has a paid community class that can teach you to weld, code, or design. Now is the time to invest in your future by investing in yourself and your skillset.

Come to think of it, last year’s TV is still looking pretty great, isn’t it? Getting a big fat tax refund is always nice, but using it wisely to build wealth is even better. It’s certainly something to consider this spring.

Stick around on our blog for more applicable advice on how to build your wealth and stop the cycle of debt and borrowing. Visit our main Helix by Lead Bank site to learn more about personal loans, how they work, when to borrow and when to avoid them.