Smart Uses for Your Tax Refund
Your tax refund marks a great chance to set yourself in a better position for the future. If you’re getting blessed by the IRS, here are a some great ways to make sure your money continues to work for you.
Get Out of / Reduce Your Debt.
If you are like most people today, you owe someone something. Using your tax return to eliminate or reduce your debt is a wise choice. Going this route allows you to put more money in the bank every month once those minimum payments vanish from your list of bills.
Create an Emergency Fund
Even when you plan for the future, emergencies happen. Using your refund to start or augment an emergency fund could leave you breathing easier should one of those events arise. You may want to consider different options in savings plans beyond banks, to get the most return on your funds.
Someday that day will come. What better way to be prepared than by adding your tax refund to your retirement account. You can use the funds to purchase or augment a Roth or traditional IRA, which sequesters your money away for when you’re no longer on the job.
If you have children I’m certain you are aware of the growing costs of a college education. Setting up a 529 plan can help them afford a higher education without leaving them saddled with massive debt along with the diploma. You may also benefit from this when filing next year’s tax return.
Invest in Yourself
You may have alway wanted to enhance or continue your own education. It’s hard to compete on the job if your skills aren’t up to date. Your refund check can go toward tuition for courses that update your skills. By taking advantage of the Lifetime Learning credit, you may be able to use the costs of the course to take money off your taxes again next year.