What Should You Do With Your Tax Refund?

Barbara Dodge, financial advisor at Edward Jones
Barbara Dodge, financial advisor at Edward Jones

By Barbara Dodge

It’s tax-filing season again – which could mean you’re in line for a refund. What should you do with the money?

Your decision can depend on the size of your refund. Last year, the average tax refund was about $2,760. If you got that much this year, and you applied it to an IRA, you’d already be halfway to the annual contribution limit, although this limit is higher if you’re 50 or older.

You also could use your tax refund to pay down some debts. The lower your monthly debt load, the more money you’ll have to invest for the future.

Or you could use your refund to help build an emergency fund to pay for unexpected costs, such as a major car repair. You’ll want to keep your emergency fund in a liquid, low-risk account.

Here’s one more possibility: Use your tax refund to add new investments that could help fill some gaps in your portfolio.

A tax refund gives you a chance to improve your overall financial picture. So take your time, evaluate your options and use the money wisely.

Barbara Dodge, financial advisor at Edward Jones 706 University Ave. Rochester, NY 14607. O: 585-271-3808 E: Barbara.Dodge@edwardjones.com.

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