What should I do with my tax refund?
ALBUQUERQUE, N.M. — It’s tax filing season and many are looking forward to getting their tax returns.
David Hicks, a financial advisor with Oakmont Advisory Group, shares some smart ideas about what to do with your tax refund.
Paying off or lowering your credit card balance, personal debts, etc.
- Lowering your personal debt may not be the most attractive option to you in the present
but your future self will absolutely love you for it.
- Alleviating your personal debts opens up your life to that much more freedom and
paves the path to financial success down the road.
Contributing to a Roth or personal IRA account.
- A penny saved is a penny earned, more like doubled or tripled! Funding or starting a
retirement account (especially a Roth) will allow you to live a far more comfortable life
down the road.
- Investing in a Roth, especially while you’re younger, will pay massive dividends come
the later stages of your life when those funds have had the chance to grow tax-free and
be withdrawn tax-free.
Bolster your emergency/backup savings account
- With the tremendous amount of uncertainty going on in our world today mixed with high
levels of inflation and rising interest rates, padding your emergency savings account can
help create a better buffer to your finances in the event that something catastrophic
occurs in your life.
Contribute to your child’s education or your HSA account.
- Education is something we can all count on to be more expensive tomorrow than it is
today. Establishing and funding a 529 or Coverdell ESA plan can help ease some of this
burden come the time for your child to go off to secondary or trade school.
- Personal funding of your own HSA or starting an HSA account (if applicable) is another
way to certainly invest in yourself by creating an investment vehicle with the sole
purpose of looking out for your future health.
Deferred home, auto, or personal maintenance.
- It’s easy to put the little things on the back burner but that only works for so long.
Delaying repairs and services to your home and car can be immensely costly down the
road and paying a little now will save you a lot later.
- If you’ve fallen behind on your health (mental/physical), paying for a personal trainer,
going to therapy, or having money to pay health care deductibles will generate more
good than going to the casino or buying that new fancy gadget ever could.