Spend Your Tax Refund Wisely
By: Sharon Brooks, Financial Counselor
For many of us, filing taxes seems like a pain, but that pain is partially offset by knowing that a few weeks later we’ll get a nice refund from Uncle Sam (assuming you don’t have to write him a check). Last year, the average tax refund was $2,725.
Before you go out and spend your refund on that flat-panel TV you’ve been looking at, take a deep breath and consider a few ways you can put that money to better use:
- Pay Off Debt: One thing you can do with your refund is to pay down debt. If you carry a balance on your credit cards from month to month, the interest can really add up over time. Think about other debts that you have and make a plan to pay those, also.
- Save For Emergencies: Experts recommend putting aside at least three to six months of living expenses in case you lose your job, incur unexpected medical expenses, or experience other unplanned events. If you don’t have a savings account, your tax refund can give you a significant boost in starting one.
- Save For Retirement: Put your refund in an Individual Retirement Account or your 401(k) plan (especially if it has matching contributions). Retirement may seem far off, but the sooner you start saving, the faster your account will grow.
- Invest In Yourself: Consider spending part of your refund on something good for your health (like a gym membership) or your community (charitable contributions).
If you’re intent on splurging, consider using at least a portion of your tax refund for one of these investments in your future. You worked hard for that money – make it work hard for you too. Remember that we’re always here to help you achieve financial success:
- Join us for a “Know Your Dough” workshop February 6.
- Schedule a free appointment with our Financial Counselor.