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Make the Most of Your Tax Refund

Make the Most of Your Tax Refund


After you've filed your taxes, do you wait impatiently for your refund and make plans for all the ways you want to spend the money?

This year, consider doing something different...something that your future self will thank you for.

torn paper with TAX REFUND printed on it on top of official form & papers

The average tax refund is nearly $3,000, which is more than just a little extra spending money. Financial advisors suggest possible ways you can make the most of your tax refund this year:

  1. Start an emergency cash fund:  The majority of financial advisors recommend setting up a separate savings account with three to six months of living expenses saved in the event of a layoff or unforeseen health problem that isn't covered by insurance. Keep this emergency account separate from your checking and regular savings accounts so you won't be tempted to drain the fund by spending the money on non-emergencies.  Starting a secondary savings account at 1st CCU is easy, you can do it from the comfort of your home within 1st CCU Anywhere online or mobile banking, simply click 'Add an account' and follow the prompts. 
  2. Invest for your retirement:  If you decide to put away your refund for a longer term, advisors recommend putting it toward your retirement by adding more to your employer's retirement program, or open a Traditional or Roth IRA if you are unable to contribute to an employer's program.
  3. Invest for your child's college education:  If you already have an emergency fund, and if you're well-invested for retirement, turn your attention toward building your children's (or grandchildren's) college savings plans.
  4. Pay down high-interest debt:  Many financial advisors believe it is prudent to use your tax refund to pay off as much of your high-interest debt as possible. They advise making a list of all loans, balances, and corresponding interest rates. Start by paying off the highest interest rates first, and work your way from there.

While it can be tempting to use the refund to take a vacation or to purchase a long-awaited new television, computer or other high-tech gadget, take a long hard look at your economic situation and the current economy first. Investing the money in financial stability or a brighter future is a smart choice.

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