Your Tax Refund: What you can do with that extra cash
Got your tax refund? Let’s go crazy!
Shoot. You know me better than that.
The average US tax refund was $2,800 in 2016. What to do with that mad money?
Here are some ideas, in order, from your friendly financial planner:
- Pay off credit card debt if you have it.
- Create or add to your emergency fund if you don’t have one or it’s skimpy. You should have at least 3 months’ essential expenses (rent, food, medical, utilities, car payment) set aside in a savings account. Your 401(k) at work is NOT your emergency fund.
- Increase your contribution to your work retirement plan and use the tax refund to make up the smaller amount in your paycheck. Don’t have a retirement plan at work? Open an Individual Retirement Account (IRA) at your bank or a discount brokerage firm.
- Put the money in a 529 account for your kid(s) college.
- If you’ve covered all those bases, reward yourself! Put the money in a vacation fund or refresh a room in your house with new paint and lighting. Or treat a group of friends to a dinner and a movie.
Happy after-tax season!
This blog focused on small niche funds or ETFs. For a list of more broad based mutual funds that meet a sustainability criteria, check out this article from Barron’s by Leslie P. Norton and Crystal Kim in October of 2016. (Click here.)
This article has great advice about cleaning out a late loved one’s home. (Click here.)
Here is an article with some good ammo for those Social Security Number requesters. (Click here.)
Still looking for ways to deploy that tax refund? Here are more ideas. (Click here.)