5 Smart Ideas for Your Tax Refund

It’s tax time—and planning ahead for your tax refund means you’re more likely to use it wisely. 

More than 111 million Americans will get a tax refund this year, averaging close to $3,000. That’s a nice chunk of change. But without a plan for how you’ll spend it, that windfall can easily get absorbed by mindless spending, paying bills, and day to day expenses.

Wealth management starts with the awareness—of what you have, what you need, and how you want to use the wealth you create. So this year, as you’re working on your taxes, make a plan for the smartest way you can use your tax refund to benefit your financial wellbeing. Here are some ideas to get you started.

Pay down high-interest credit-card debt. One rule of thumb financial planners tend to love: If you don’t have the cash for it, don’t buy it. If you’re carrying a balance and paying interest on a credit card, you’re actually paying a premium on every item you buy. It’s like buying regular groceries at Whole Foods prices. So it’s always a wise move to use any financial windfall, like a tax refund, to pay off credit cards and get your debt back down to zero.

Beef up your emergency fund. The past year has shown us that having a cushion of emergency savings is a lifesaver because we never know what life is going to throw at us. If you don’t have an emergency fund yet, use your refund to open a savings account and get one started. If you already have a fund, use your check to add to it—ideally, you want six months of living expenses.

Invest in your retirement plan. Contribute to your 401k or IRA. If you work for an employer who offers a company match for your contributions, definitely start there—you’ll be taking advantage of free money and see your savings grow faster.

Prepay your mortgage or car loan. This is another opportunity to pay down debt and save on interest payments in the long term. Use your refund to schedule an extra mortgage payment for the year, and be sure to earmark it toward your principal. This extra mortgage payment calculator helps you figure out how much money an extra annual payment can save you over the years.

Reward yourself. If you’re not where you should be with debt and savings, don’t blow your whole refund on a luxury trip. But at Aspen Wealth Strategies, we believe in making financial planning humane and innately rewarding—you want to feel good about your money, your plan, and how it’s working for you, and creating rewards and positive associations for saving means you’re more likely to stick with your plan. So once you’ve used most of your refund to create financial wellbeing, go ahead and treat yourself to a new yoga mat, a dinner out, or a special bottle of wine, and celebrate having the discipline and forethought to put your tax refund to work for you in the best way possible.

Aspen Wealth Strategies can help you create customized plans to maximize your financial goals. Get in touch to see how a financial planner can help you prioritize saving and spending goals and put you on the road to financial peace.

See All

Take Advantage of Our Comprehensive Investment Guidance

Connect with an Advisor

External Link Notice

The following website is being provided for informational purposes only. Raymond James is not affiliated with and does not endorse, authorize, or sponsor the following website or their respective sponsors. Raymond James is not responsible for the content of the websites or the collection or use of information regarding the websites’ users and/or members.

Continue Cancel