ReFUNd

With tax season quickly approaching, the idea of getting money back from Uncle Sam has you envisioning a big splurge!  With over half of Americans receiving a tax refund planning for what to do with the windfall can be fun.  

The 2018 tax year had taxpayers seeing refunds on average of $3000.   While you may think Americans choose to splurge that refund on unnecessary goods, the most significant percentage intended to save their return.  Regardless of whether you spend, celebrate or save, the majority of taxpayers had a plan in place for that beloved refund check.

I think we all can relate to those unexpected expenses such as car repairs or medical bills that come when you least expect it.  Having an emergency fund is a great option when thinking of what to do with your refund check!  Having money set aside that could cover you when the sudden unexpected life hiccup presents itself can eliminate a tremendous amount of stress.

Once your emergency fund is started, having at least $1,000 or three to six months' expenses saved, paying down high-interest debt is another excellent option.  This may be stating the obvious, but paying off credit cards that charge 18% interest will give you more money in the bank once those cards are paid off.  It's essential to get this debt paid off and let that refund check help.

Finally, tax refunds are great for planning your future, whether it be for a college or a retirement fund.  You'll be grateful once you're at an age when you no longer work, that you put that money in a Roth or traditional IRA instead of spending it on something that wasn't needed.  Similarly, setting up a college fund for your children or grandchildren, such as a 529 plan, can help them afford college when the time comes.

There is no right or wrong way to spend that tax refund, but having a plan in place before it arrives increases your odds of actually utilizing it for what you intended.