It’s almost tax filing season, which, for many, means an additional lump sum in their bank account in the form of tax refund. It's tempting to splurge, but your newly acquired pot of money is more than a bonus, it's an opportunity. Whether you're working toward financial stability or long-term wealth, how you use your refund can change the course of your financial health.

1. Boost Your Emergency Fund
If the past few years have taught us anything, it's that unexpected expenses are inevitable. Car repairs, medical bills, job changes or even a global pandemic can throw your finances awry. Experts recommend setting aside three to six months' worth of living expenses in an emergency fund. If yours is lacking, using your tax refund as a stimulus to your emergency fund might be a good idea.

2. Tackle High-Interest Debt
Credit card balances can stack up and paralyze your savings. Using your refund to pay down debt can save you thousands or even lakhs, over time. Start with the debts that carry the highest interest rates. Your efforts to nullify your debt now will greatly benefit you in the long run.

3. Boost Your Skills
If you find yourself falling behind at work or have been meaning to make a career switch, your tax refund could come in handy. Use the money to invest in courses or programs that will help you upskill or give you new technical know-how. Your newly acquired skills may even help you negotiate a higher wage, putting more money in your pocket.

4. Retirement Fund
Retirement may seem a long way off, but you can never be too early in planning for your future. If you haven’t already set aside some money for a retirement fund, you can use your refund to kick start the process with a savings account.

5. Get Fit
How’s that new year’s resolution of getting in shape looking? If you think you’ve done dismally, your tax refund could be your redeeming chance. Use the extra money to get a premium gym membership or consult a dietician or pay for in-home workout equipment or fitness gear. Improving your health might just be the best use of that extra influx of cash.

Whether you save it, invest it or reduce your debt, using your tax refund wisely can set the stage for financial growth. It's not about depriving yourself, it's about being intentional toward building a secure future. So before you hit “add to cart” for an impulse buy, remind yourself that this refund could fund your future.

ALSO READ: More Savings, Less Tax: What the New TDS Rules Mean For Your Finances

Disclaimer: The article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of The South Indian Bank Ltd. or its employees. The South Indian Bank Ltd and/or the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial/non-financial decisions based on the contents and information’s in the blog article. Please consult your financial advisor or the respective field expert before making any decisions.