If you are anything like a large proportion of the American population, then year after year you look forward to receiving a tax refund in the mail. Tax refund checks are a nice economic boost for the average family. The funds come early in the spring and open the door to a bit of financial freedom, giving many families a bit of extra disposable income that they may not have throughout the remainder of the year.
With this yearly check come weighty decisions and a good bit of personal responsibility. What is there to do with your tax refund? Are some spending decisions wiser than others?
Just for you, your tax professionals have compiled a brief list of some of the best ways that you can spend your tax refund this year:
- Pay down debts: If you are interested in being responsible, then paying down high interest credit card debt may be your best bet for your refund. Paying off the balance of a credit card with a high interest rate automatically reduces your monthly expenditure, which might give you more breathing room year round.
- Pad your savings: Sometimes the best way to use your tax refund has nothing to do with spending it. Put your tax refund into a savings account and have it work for you. Combine your tax refund with existing funds in your savings account to create a money market or CD for extra interest earning potential.
- Boost retirement savings: If your modified adjusted income is less than $125,000 for an individual than you can contribute up to $5,000 to your IRA for 2012. The extra funds from your tax refund are a great way to boost your yearly contribution to your retirement account.
- Create college accounts: If you are having trouble setting aside funds paycheck to paycheck for your children’s college savings accounts, then try using your tax refund to supplement your minor yearly contributions.
- Reinvest in your home: Your house is more than a home, it is an investment. Treat it as such by putting a little bit of TLC into where you live. As spring settles in and the weather warms up try allocating some of your tax return funds into sprucing up your front landscape, fixing broken doors and windows and giving your walls a fresh coat of paint.
There are plenty of ways that you can use your tax refund, and not all of them involve spending money. Of course, if you are more interested in putting your money into something you will benefit from on more of a personal level, you can always use your tax refund for a family get away!
For assistance getting the maximum refund on your tax return, talk with a certified tax professional.