Author: Ryan Hirsch, NASBA Multimedia & Video Services Manager
Posted: April 3, 2012
The IRS recently released information indicating that the average tax refund is approximately $3,000. That is enough money to buy 12,000 packs of chewing gum, 800 gallons of gasoline or one 70-inch television. There are a multitude of things people can do with their tax refund checks. Below are six wise investments for your refund money:
- Build an Emergency Fund
Life is unpredictable, so it’s always good to have a cushion in case of a job loss, medical illness, car repairs, etc. Failing to create an emergency fund could lead to debt if you are not prepared for an unexpected expense. Many experts recommend saving three to six months worth of living expenses.
- Pay off Loans
Loans almost always have some sort of interest rate, which continues to add to your debt. Paying off loans with the highest interest rate can often help you reestablish your financial footing. Additionally, homeowners who make extra mortgage payments toward the principal of their loan can often shave years of payments off these loans.
- Save for Retirement
Although there are some who work well into their 80’s or 90’s, most individuals expect to retire between ages 60-70. With that in mind, it is imperative that you begin saving for your retirement. Consult with a financial professional to determine how much money you will need after retirement and then develop a savings/investing plan to achieve your goal.
- Invest in Education
Setting aside money for school is a great option because it may pay for itself in the long run. Assess what type of position and salary you believe your education will lead to and then determine if your desired school’s tuition is feasible for your budget, based on projected earnings.
- Maintain Car or House
When cash reserves are low, some people opt to skip routine maintenance for things like changing air filters, engine oil or transmission fluid, etc. This may save money short term, but will eventually cause you home appliances or car to break down and require expensive repairs. Paying for these smaller maintenance items now can help you avoid trouble in the future.
- Make a Charitable Contribution
In addition to supporting great causes, charitable contributions are also tax deductible, and could generate more money for next year’s tax refund.
These are just a few examples of financially sound tax refund options. Visit our Facebook and Twitter pages, and let us know some of your investment ideas.
“IRS Chief: Average Tax Refund this Year About $3000” 3/22/12
“How and Why to Start an Emergency Fund” J.D. Roth 10/8/06