Right now is the time that many of you have tax refunds rolling in and you could be wondering what to do with your windfall from Uncle Sam. It’s easy to plan shopping trips (and many retailers are hoping that’s exactly what you do) or a summer vacation but to live a life of frugality, it may be time for you to look a little further.
According to Kipplinger.com: “The average refund has been around $3,000 for the past two years…that’s a nice chunk of change.”
Kipplinger suggests that if if you have cash in-hand it would be wise to take a peek at your financial portfolio before making big purchases.
Consider paying off any credit cards you have, or at the very least, paying some of them down, especially the ones with the highest balances and interest rates.
Do you have an emergency fund? Bankrate.com says many financial experts now say that you need at least 9 months in reserve for an emergency. If you don’t have a fund like this started, you should. Dump some of your tax money in a separate savings account and then add $100 a month to keep the fund growing.
Now onto to that important family vacation! Use your tax money to pay a down payment on your family trip, Kipplinger suggests. Use cash and don’t put anything on a credit card, by paying small increments your trip will easily be paid for without digging for those credit cards.
Start a college fund for your child/children. It’s never to late to begin saving for your children to attend higher education. Investopedia says that a “common tuition plan, called a section 529 plan, allows you to prepay qualified higher education expenses at eligible institutions.” Not all 529 plans are the same, so you’ll want to do some research to see which would be the best fit for your family.
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