How many times have you promised yourself to do the right thing with your tax return? The lure of a new entertainment system, fancy furniture or the latest mobile phone can easily derail good intent. Make the most of your refund with these possibilities before going out and buying the latest and greatest. It may not be as much fun, but you will be thankful later.
- Make a payment(s) on high-rate debt. Start with the balances that have the highest interest rate.
- Open a savings account or add to one. A good rule of thumb is to save enough to cover 3-6 months of typical monthly expenses. That way if you experience a life event such as illness or losing your job you will be prepared.
- Start saving for your child’s education. A 529 plan is the perfect way to get started and has tax advantages.
- You want to retire someday, right? Make a one-time contribution to your 401K retirement plan or open a Roth IRA.
- Make some extra payments. Whether it is your car, home or student loans, paying down the balance can save you on interest expense.
- Consider giving back to your community. A lot of times not only are you helping those in need but you are also setting yourself up for a tax deduction next year.
- Own your home? Consider making improvements that will increase the value. Whether it is renovating the kitchen or bathrooms or installing energy efficient windows, using your refund for these items will pay back in the long run.