Smart Ways to Use your Tax Return

Posted by Janet Heinsler on April 15, 2015

Boost Your Emergency Fund. As discussed in a previous article, every household should have an emergency fund. This would be a great use of some of your income tax return. It is always hard to keep this up to date so even if you have enough, you should put more in while you have it.
 
Pay Down debt. This is a great time to pay down any debt you have. By paying a little extra, you will be paying less in interest and save yourself money in the long run. Although it seems like you can't get ahead with the mortgage, you really can. You wouldn’t believe how much just paying one extra payment a year would save in interest. This is definitely a great way to use your tax refund.

Make Home Improvements. There are a lot of home improvements you can do that will help you save money in the long run. For example, it has been estimated that the average home energy bill is about $2400 a year. If you insulate the cooling and heating ducts that run through the attic, your unheated basement, crawl space and garage you can save a great deal on future electric bills.
 
Prepay an Annual Expense. You might want to pay for a year of your cell phone bill, car insurance or any other monthly bill you may have.

Contribute or Open a 529 Plan. A 529 plan is a college savings plan that you can use to help put your child or grandchild through college. Since tuition rates have been continually going up this would not be a bad idea. If you are trying to save for your child to go to college you might want to visit savingsforcollege.com.

Donate to Charity. If you don’t really need the money it would be great if you could donate to one of the many worthy charities out there.  If you decide to do this, make sure you get a receipt so that you can declare this as an expense on you income taxes next year.

Family Vacation. If you plan on a family vacation you can put it toward this. It would be very helpful if you are planning a big vacation in a year or two. You can save it up so you will have enough to go to Disney World or some other big resort.