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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

 

Source

  1. https://www.cpapracticeadvisor.com/tax-compliance/news/12439495/irs-tax-return-stats-for-2018-tax-season