New Yorkers who filed taxes in 2023 might be seeing some extra cash in their accounts thanks to the state’s inflation relief checks. Single filers are eligible for up to $200, while joint filers and surviving spouses could receive up to $400, with the exact amount dependent on income levels.
The first wave of these checks began arriving in October from the New York State Office of Taxation and Finance. Now that many have received or will soon receive this unexpected windfall, the question arises: what’s the best way to use it?
Here are some smart options to consider:
Tackle High-Interest Debt
The most straightforward approach, though perhaps not the most thrilling, is to put the money toward high-interest debt like credit cards or payday loans. A payday loan, typically capped at $500 by federal law, often requires repayment with an additional fee of $10-$30 for every $100 borrowed. This means a $100 loan could quickly balloon into $110 to $130, while a $400 loan could cost as much as $440 to $520. An inflation refund check offers a chance to wipe out these smaller debts entirely, freeing up future income for other goals.
Kickstart an Emergency Fund
Financial experts consistently advise having three to six months’ worth of essential expenses saved for emergencies. However, building this safety net can feel daunting if you’re starting from scratch. An inflation refund check allows you to begin small. A $200 check puts you a fifth of the way toward the commonly recommended minimum emergency fund of $1,000, while $400 gets you almost halfway there. This cushion can prove invaluable for unexpected expenses like car repairs or medical bills, preventing reliance on high-interest credit cards or predatory loans.
Invest in Yourself and Your Wellbeing
Already comfortable with a basic emergency fund? Consider using the check as an investment in your personal growth. “Invest it, but use the refund to invest in yourself,” advises Chris Motola, financial analyst at National Business Capital. “It’s around the right amount of money to try out a course or club membership.”
Prioritizing physical and mental health can lead to reduced stress and improved overall well-being. This, in turn, can positively impact your ability to manage finances effectively and achieve other personal goals.
Expand Your Hobbies and Interests
Investing doesn’t always have to mean the stock market. If the financial pressure is eased by the refund check, consider using it to fuel your passions. “Consider upgrading a tool of your trade or equipment related to a hobby you enjoy,” suggests Motola. This could lead not only to enhanced enjoyment but also to potential social connections and networking opportunities. In this way, even a relatively small sum can yield significant returns in terms of personal enrichment and growth.
Combat Rising Food Costs
For many households, the impact of inflation is keenly felt at the grocery store. An inflation refund check offers a chance to alleviate this strain, even temporarily. Putting the money toward your grocery bill can provide a welcome reprieve from rising food prices, giving you some breathing room in a tight budget.
In conclusion, while the New York inflation refund check might not seem like a life-changing sum, it presents a valuable opportunity for smart financial choices. Whether tackling debt, building savings, investing in personal growth, pursuing hobbies, or simply easing the burden of rising food costs, this unexpected windfall can be a stepping stone towards greater financial security and well-being.
