Five Smart Things to Do with Your Tax Refund

With tax day over and many Americans awaiting their refunds, you may be thinking about all the things you can buy with that check. But is it a good idea to buy the latest big-screen TV or some other item with your tax refund? Or would that money be spent better some other way? If you are looking for a more productive and responsible way to use your tax refund, here are five smart ideas for you to consider.

1.    Maintain your vehicle.

If you have been putting off those repairs or preventative maintenance procedures on your car, tax refund time is the best time to get those things taken care of. Get the oil change, rotate the tires, get a tune up and anything else that you have been putting off. You may also want to check the tires and see if any of them need to be replaced at this time. You may also want to consider getting that noise checked out or fixing the leak that has been worrying you lately. Your vehicle may need to last you for several more years to come so maintaining it properly now that you have a little extra money may save you some money and frustration later.

2.    Create an emergency fund.

Many people get into financial trouble because they do not have any money set aside for emergencies. As a result, they end up charging things on their credit cards, borrowing money from others or just simply ignoring the emergency which can make it worse.  A good start for an emergency fund is about $1000, but you can put more or less into your emergency fund depending on the amount you get back with your tax refund. Make sure to put it into an account that is not easily accessible so you will not be tempted to spend it on anything other than an emergency.

3.    Put it towards your retirement.

Very few people fund their retirement properly, especially when they are young. Your tax refund is the ideal way to either start a retirement plan or contribute to your existing one. Some employers will even match your contributions to your 401k so you could increase your retirement fund significantly by depositing your tax refund. You could also consider other retirement fund options like the Roth IRA, traditional IRA or other fund.

For an IRA, you can contribute up to $5,000 for an individual or $10,000 for a married couple. However, if you will be at least 50 years old at the time of the contribution, you can contribute up to $6,000 for individuals or $12,000 for married filers.

4.    Put it towards school.

Have you been wanting to go back to school and finish your degree or take a few classes that will increase your salary? If so, your tax refund is the perfect way to make that happen. Choose a community college that offers the classes you need or even an area university for more advanced classes. There are hundreds of online courses you can choose, too, so your possibilities are limitless.

If you are already in your career and you have kids, putting your tax refund toward your child’s college education is a great idea as well. In a 529 college savings plan, your money grows tax-free and your withdrawals are even tax-free if it is used for higher education purposes. With the rising costs of tuition, it’s never too early to start saving for your child’s educational future!

5.    Better yourself.

With the economy as bad as it is right now, people are being laid off all over the nation. As a result, you may want to make sure your resume is up to date and accurate. You can hire a professional resume writer to spruce up your resume in case you become a casualty of the economy. You may even want to consider hiring a life coach or career coach to help you determine ways to make yourself better. You can always be more successful or be a better person and investing your tax refund in yourself is an ideal way to make that happen.

As you can see, there are many things you can do with your tax refund besides buying the latest gadgets or electronics. With today’s financial problems, saving as much money as you can is one of the smartest things you can do to help prepare for worse times ahead. Take some time to consider your options and do your homework to make sure you are making the best investment that you can with your tax refund.