Tax season is here and everyone will be giving you advice on how to use your refund. The average refund check is around $3,000 – what a great opportunity to make your money work for you!
- Start or Pad Your Emergency Fund
An emergency fund is the foundation of any good financial plan and your tax refund is a great opportunity to start yours. We recommend having 3-6 months of living expenses saved in your savings account for a rainy day, and your refund can be just the seed money you need to get started. An amazing thing happens when you have a well-funded emergency fund, you tend to have fewer emergencies!
- Pay Down Your Debts
Your tax refund represents an opportunity to get out of debt or pay down your balances. If you have already solidified your emergency fund and you have any high-interest debt such as credit cards or personal loans, consider putting your refund toward it. You’ll be glad you did.
- Invest in your Retirement
Think of your tax refund as your retirement secret weapon, especially if you are not offered a retirement plan through work. Although there are certain eligibility restrictions, a Roth IRA is a great retirement account option. You contribute money you have already paid taxes on, choose investments that fit your risk profile, your investments can grow tax-free and when you pull that money out after you are 59.5 years old it is not taxed.
- Give to others
If you have your own financial house in order, consider using your tax refund to support a cause or organization you care about. Some of our favorites are SNAP, Volunteers of America, Transitions, Project Beauty Share, and the Women’s and Children’s Free Restaurant.
Have questions about what to do with your tax refund? Come in and see us, we’d be happy to talk with you. We even offer members a 15% discount on Turbo Tax.
Need help preparing your 2018 tax return? Last year, the Spokane Cash Coalition helped file 4,732 tax returns for free and brought in $4.9 million in refunds back into the local economy. To find a free tax preparation site or to volunteer to help visit their website www.spokanecash.org.