Money Monday: Tips to Spend Your Tax Refund Wisely

Don't forget about your taxes!

Tax season is still in full swing, so if you still have not filed your taxes, now is the time to do that. The deadline to file your federal taxes is on or before Tuesday, April 15

If you're in the process of filing or already have maybe you're wondering how you will spend it your refund. A lot of people head straight to the dealership to get a new car or maybe a brand new flat screen TV. 

These are obviously fun things to spend your refund on but I wouldn't say that's for everyone. Jill, my friend and fellow Spokester from Young & Free Alberta shared tips on spending your 2013 tax refund wisely and I thought I should share some of her thoughts.

So, if you want to make a healthy financial decision this year consider the following tips to spend your refund wisely:

IF YOU ARE RECEIVING A TAX REFUND THIS YEAR, PUT THAT MONEY TO WORK FOR YOU:

  • Add to your emergency fund. Set aside enough cash to cover six months of expenses in case the unexpected happens.
  • Pay down credit cards and other high interest debt. You will save money on interest charges and increase your monthly cash flow.
  • Jump start your retirement fund. Contributing to an IRA or Roth account in your twenties will acquire interest over the years which means thousands more in your pocket when you retire.
  • Pay down your mortgage. Lump sum payments on your outstanding principal will save significant dollars in interest charges over the long term. It also means you will be mortgage-free sooner.
  • Save for a child’s education. Invest in a registered education savings plan on behalf of a child, niece, nephew, etc. 
  • Pay down student loans. Most student loans have a six month grace period during which time you are not required to make any payments towards the interest or principal. Remember that the interest owed accumulates until the loan is paid in full. (Even if you currently still in school, don't defer!)

Remember, a tax refund isn't free money—it's your money. It's a refund for taxes that you paid the government and tax credits

The information in this article is provided for educational purposes should not be considered personal tax advice or investment advice.

Be well,

Lauren R.