Smart Ways To Use Your Tax Refund
The average tax return for the past two years has been nearly $3,000, according to IRS.gov. That’s a nice lump sum to receive all at once. While it can be tempting to splurge on the fun stuff, you might be better off putting a refund toward “needs” rather than “wants,” and making that money really work for you. Here are some smart ways to use the money if
you anticipate a refund.
Save for a rainy day. If you don’t have an emergency fund set aside, you can use your refund to start one. You’ll be glad you did if you are faced with a sudden car repair or medical bill. If you already have a fund, use your refund to add to it.
Increase retirement savings. Consider adding to your 401(k). If your employer doesn’t offer a retirement plan or you have already met matching requirements, consider starting an IRA, which gives you more control over your investment options than with a traditional 401(k).
Give back. If you don’t have debt, and your savings for retirement is sufficient, think about making a charitable contribution to help others in need. Not only will you feel good about making a difference, but it may be eligible as a deduction in 2015 if you itemize.