Smart ways to use your tax refund : GKM Inc – Blog

Smart ways to use your tax refund

Posted by:   |  May 18, 2018  | Post comments

Strengthen your retirement savings – you can consider directing all or part of your tax refund into your retirement savings for an instant boost. One way to do this is to deposit your refund into an IRA which is a type of retirement account for individuals that offers certain tax advantages. Or you could simply deposit your refund into a regular brokerage account earmarked for retirement. Either way, the money you invest has the potential to grow over time, perhaps to a sum far greater than the amount of your tax refund.
Save for a rainy day – unless you already have an amount equal to a few months’ worth of expenses stashed away for emergencies, consider adding your tax refund to your emergency fund.
Pay off credit card debt – if you are carrying balances on your credit cards, use your tax refund to help pay them off. The high interest rates charged by credit card companies can take a big bite out of your income, making it difficult for you to save for your goals. Consider paying off the card with the highest interest rate first.
Fund a college savings account – if you have young children, contributing your tax refund to their college funds may be a smart move. Education savings accounts that allow tax-free earnings and withdrawals for qualified education expenses may help stretch your contribution further.
Draw up your will – although this may be the least exciting thing to do with your tax refund, it is an important thing to do, especially if you have young children. That is because a will is where you name the person you want to act as a legal guardian to your children if you should die while they are still young. Drawing up a will now can help ensure that your wishes are carried out later on.
Invest in yourself – your health and your ability to earn an income may be your greatest assets. Consider using your tax refund to improve on the return on those assets by spending it on fitness activities, learning a new skill that can benefit your career, or funding a business you have dreamed of starting. Provided you are on track to meet your financial goals, consider using your refund for a long weekend away or to tick off some item on your bucket list.
Find your financial direction – if you are unsure of how to make the most of your tax refund, consider using it to hire a financial advisor who can help you prioritize your financial goals and create a financial plan helping you move forward.
Give to charity – receiving a tax refund presents an excellent opportunity to make a gift to a charitable cause you care about. Be sure to get a receipt for your charitable gift if you plan to claim a tax deduction for it.
Please feel free to get in touch with your advisors at GKM on how a tax refund, year-end bonus, or other financial windfall can be best put to use.