ATLANTA, Feb. 24, 2016 /PRNewswire/ -- Millions of Americans will benefit from a tax refund or performance bonus this year, but deciding how to best allocate these funds can be a challenge. To help turn this newfound cash into financial confidence, SunTrust Banks, Inc. (NYSE: STI) is offering simple tips that can make a significant difference, regardless of one's financial situation.
1. Start an emergency fund. If you don't have an emergency fund to ease the stress of the next unexpected expense, direct a portion of your refund or bonus toward establishing one. Consider contributing 70 percent if you are just getting started. If you already have $2,000 in savings, allocate 20 percent of your refund to keep it growing.
2. Pay off debt. If you have an emergency account, consider using 50 percent of your refund or bonus to pay down high-interest debt. If you already used a larger portion of this money to establish your emergency fund, instead think about setting 20 percent aside to pay down debt.
3. Reward yourself. Consider "paying" yourself 30 percent if your emergency fund is over $2,000; if under $2,000 this number should be 10 percent. If you are planning a summer vacation or weekend getaway, use your refund to prepay the hotel room or plane tickets. Often you can get a discount on hotel rates if you pay in advance – and you won't have bills to pay when you get back.
4. Review your tax withholdings. Finally, if you've received a sizable refund, you may be paying too much in taxes throughout the year. Consider adjusting your tax withholdings so that less money is taken out of each paycheck. You can use that money to increase your contribution to an employer-sponsored retirement plan or health savings account.
"When in doubt, a good rule of thumb is the 50/20/30 formula," said Brian Ford, SunTrust Financial Well-Being Executive. "Allot fifty percent of the total funds to pay down debt, 20 percent to savings and 30 percent to short-term spending. Above all, you want to have a solid financial foundation in place through an emergency savings account so you are prepared for anything unexpected."
SunTrust recently launched the onUp movement to help people move from financial stress to confidence. Americans can join the onUp movement and commit to take the first steps toward financial confidence by visiting onUp.com. The site offers budgeting solutions, saving tips, retirement investing strategies and more.
SunTrust also shares financial tips on Facebook and Twitter. Visit twitter.com/suntrust and facebook.com/suntrust.
About SunTrust Banks, Inc.
SunTrust Banks, Inc. is a purpose-driven company dedicated to Lighting the Way to Financial Well-Being for the people, businesses and communities it serves. Headquartered in Atlanta, the company has three business segments: Wholesale Banking, Consumer Banking and Private Wealth Management, and Mortgage. Its flagship subsidiary, SunTrust Bank, operates an extensive branch and ATM network throughout the high-growth Southeast and Mid-Atlantic states, along with 24-hour digital access. Certain business lines serve consumer, commercial, corporate and institutional clients nationally. As of December 31, 2015, SunTrust had total assets of $191 billion and total deposits of $150 billion. The company provides deposit, credit, trust, investment, mortgage, asset management, securities brokerage, and capital market services. SunTrust leads onUp, a national movement inspiring Americans to build financial confidence. Join the movement at onUp.com.
SunTrust Bank, Member FDIC. © 2016 SunTrust Banks, Inc. SunTrust is a federally registered service mark of SunTrust Banks, Inc.
SOURCE SunTrust Banks, Inc.