Best Ways to Spend Your Tax Refund

If last year was any indication of what to expect come tax time, you are probably preparing to receive a sizable tax refund. The IRS reported that in 2014 the average tax filer received a refund of $3,034. That is a lot of money to instantly get, but it can be put to good use if you spend it wisely. Think of it as an investment in your future.

When you receive that tax refund, don’t go out and purchase the latest electronic gadget or go on a vacation. Consider spending your money on something that will enhance your life and give you financial security.

Looking for suggestions? The following are four of the best ways to spend your tax refund.

Invest in Classes, Conferences, and Seminars for Career Advancement

Secure your financial future by investing in activities, classes, or events that will help you advance your career.

Some options that will help with career advancement include:

• Seminars held by industry professionals
• Continuing educational classes held at local community colleges and universities
• Conferences – networking events or industry specific conferences

Taking advantage of these career advancement opportunities could help you achieve financial success by earning promotions or finding better paying jobs. If there aren’t any upcoming events you wish to attend or ones you feel will help your career, consider putting the money aside and waiting for the perfect opportunity.

Lighten Your Current Debt

For every month you have an outstanding balance on your credit card that is money that is going out of your pocket and into the hands of credit card companies. Take some, or all, of your tax refund and use it to pay off any outstanding balance you may have on your credit cards.

For example, if you were to pay off a credit card that has a 10% interest rate, it would almost be like earning 10% back. That is because you are lessening, or in some cases completely eliminating, the amount that you borrowed, which will mean you won’t be wasting money on paying back the interest.

When making payments to eliminate your existing debt, prioritize the debt you will eliminate. Try to pay off debts with higher interest rates, as those will save you the most money in the long run. The lower the interest rate, the lower the priority is when it comes to paying off the balance.

Create an Emergency Savings Account

You might feel pretty confident that you won’t lose your job in the near future, but what happens if that should happen. Do you have enough in savings to hold you over until you find another job?

Using the money you receive from your tax return and placing it into an emergency account will help you should something unexpected happen. Emergency medical bills, a sudden job loss, your car breaking down, or a need for home repairs, all of these things will be covered with the money you put away in an emergency account.

When placing your money in an emergency account, try to find a bank that offers a savings account at a decent interest rate. This will allow you to earn money on the money that you deposit in your savings.

Place Some Money in an IRA

It is never too early to plan for your retirement. IRAs are a popular option for those looking for financial security when they retire. This type of account is like a huge savings account, but unlike a savings account at a traditional bank; these accounts give you tax breaks on the money you earn on it.

Use some of these suggestions and you will be able to confident that you have prepared well for the future.

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