The IRS reported an average tax refund of $2,600 for 2017 taxes.1 Tax refunds can leave a family with a big question mark on how to best spend the funds. It’s your money and decision but our goal is to set the course for you and your family to have a more stable financial future. Here are a few of our top picks on where to spend your hard-earned 2018 tax refund:
- Start or Increase Your Emergency Fund – Saving for a rainy day just makes good financial sense and is easily our top recommendation. Every family should have an emergency fund to cover 3- 6 months of must-pay expenses to insure life’s unexpected events do not spiral into financial disaster.
- Reduce High Interest Debt – Look for a debt that is nearly paid off to get a financial burden off your plate. Consider the finance charge savings that will come from reducing or eliminating high interest credit card debt.
- Save for Child’s College Education – Starting a 529 College Savings Plan provides a vehicle to invest for tax free growth to fund qualified educational expenses. This becomes increasingly important for families given the price of college continues to rise.
- Fund a Vacation – The amount of time we spend with our families is limited. Take time with loved ones and experience the many different adventures life has to offer.
- Fund Retirement – A tax refund can kickstart a Traditional or ROTH IRA to grow tax qualified over future years. Retirement accounts can be for you, your spouse or even for your children. Building a retirement nest egg is an important objective ongoing, both for our personal retirement security and to insure we avoid becoming a financial burden to our families in the years to come.