Receiving a tax refund can feel like getting a really early Christmas present. The question is – how will you spend it? Or will you spend it at all?
There are lots of tax refund options to consider if you’re getting a sizeable refund. They range from going on a spending splurge to putting the money aside in savings. If you’re having a tough time deciding which way to go, here are some suggestions:
- If you don’t already have one, look into opening a Roth IRA. If you already have one, consider supplementing it with some of your refund money. And you can also open a Roth IRA for your child. Children are eligible as long as they have earned income.
- Another tax refund option, a long-term savings idea, is to open a college fund for your kids. It’s never too soon to do that, especially when you think how the cost of a post-secondary education tends to rise almost every year.
- From a short-term savings side, you can put some or all of the money into a certificate of deposit. This is a great investment vehicle for purchases down the road, such as a new car. Interest-bearing savings accounts are a good savings resource, too. Bank5Connect has some great savings products you can take advantage of. Check them out at: bank5connect.com/home/high-interest-savings
- Refund money can be used toward paying down credit card or other debt.
- Create or add to an emergency fund that can tapped for unexpected expenses, such as replacing a leaky roof or car repairs.
- Tackle some home improvement projects like repainting a room or replacing a carpet.
- Consider covering gaps in your insurance, such as adding a personal liability umbrella policy.
- Creating a vacation or holiday gift account is a great tax refund option.
- Take an “all expenses paid” vacation – one that won’t put you into debt when you return home.
- Make a charitable contribution to a non-profit organization.
- Consider pursuing continuing education courses as a way to invest in your professional future.
- Buy or increase your life insurance policy to provide more for your family.
- Upgrade energy-draining, outdated household appliances with new energy-efficient models. It will help you save on energy costs in the long run.
- If you’ve been putting off a visit to the doctor or dentist because you couldn’t afford it, use some of your refund money to take care of yourself and your well-being.
We hope these tax refund options tips will help you make the most of your returned tax dollars!