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IRS: Smartest way to use your tax refund

The deadline to file your taxes was April 18.

tax refund on top of 1040 form

That means, you should get your refund soon if you haven’t already.

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How much is the average tax return?

The average tax refund this year is around $3,175. This is $360 above last year’s average. That is a healthy sum of money that could help you to reach your financial goals. Read more about it here. Use these tips to make the most of your refund.

Retirement planning

The likelihood that you are saving enough for retirement is low. It could be worth putting some of that refund money into your retirement account. Thanks to compound interest, your money will grow.

Emergency savings

Experts suggest having an emergency savings account with enough money saved to keep you afloat for 3-6 months. It is good to have this money saved in the event of you losing your job or have unexpected expenses. You tax refund could help you create that cushion

Invest

Investing either some or all of your tax refund could give you a boost down the line.

College fund

If you have a kid and already have a healthy savings, consider starting them a college fund. You can start the fund regardless of their age in a 529 fund or any college savings account.

Pay off debt or make home improvements

Using that refund money to pay off any debt like a credit card bill could be a good move. Using that money to fix your car or save for a new place is also a good use of it.


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