Financial experts say it's easy to fall into the tax refund trap. The extra money burns a hole in your pocket and you end up spending it on something that only gets you short-term fulfillment.
But financial planner Craig McDaniel says we should all be thinking long-term when that tax refund comes. He says there are five smart ways to use the money:
Pay down debt
Finance your future by building up your retirement account
Start a gift fund that you can use for holiday or back to school shopping instead of racking up that debt later in the year
Prepare for repairs to your home or car
Open or add to a college savings fund for your kids or grandchildren
"If you put a little bit of money in a Roth IRA when someone is in their 20s, it's mind boggling how much money that will grow to when they get to retirement age," McDaniel says. "Plus, it teaches your children by example. And people don't realize they can put as little as $250 in a Roth IRA."
It's easy to spend tax refunds quickly, so that's why McDaniel says you should plan what you'll do with it before you get it. He says don't treat it like extra found money. Instead, treat it like any other paycheck and use it responsibly.
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3933 Washington Road
Augusta, GA 30907