Maximising our gifts: Five uses for your tax refund
You've filed your taxes and now it's time to wait for your refund. But what will you do with that money when it arrives? While it can be tempting to do something fun with the extra cash, we have responsibilities to our families and communities to utilise it wisely.
29 Apr 2016 12:23
Whether it’s saving for your children’s college educations or donating to a valued community organisation, matching your money with your values is the way to go.
Here are five meaningful ways you can use your tax refund:
- Responsible preparation
In 2012, the average tax return was $2700, and if you use a professional tax preparation service, you may get back even more. Though costlier than preparing your taxes on your own, many companies offer discounts or incentives for choosing their services and you’re liable to get back far more than you put in to the process.
Furthermore, one laudable way to use your increased refund is to prepare for the future of an emergency. Is your backup fund for emergency expenses looking a little thin? Your tax refund offers an ideal opportunity to improve your emergency preparedness. Then, if a crisis strikes, you’ll have less need for credit or loans to meet your needs.
- Ready for retirement?
Most Americans are under prepared for retirement, in part because we fail to set clear goals. As you await your tax refund, consider what you want your retirement to be like. How and where do you want to live? When do you plan to retire? All of these factors will help you set a savings goal. When your tax return arrives, put it directly towards security in your later years.
- Invest in education
Do you have young children at home – or not so young children who have started looking at colleges? The price of a college education is only going up, so your annual tax refund can be a great time to start putting money aside. Ideally, invest it in a 529 education savings plan. These plans can offer some tax savings in years to come and keep the money safe.
- Downgrading debt
Speaking of college, many of us are still struggling with our own educational debt, or other debt sources, such as overstretched credit cards or mortgages. If you’re looking at thousands in debt – not uncommon among Americans today – it may be wisest to invest your tax refund there and reduce what you owe. The interest charged on credit card and education debt can build quickly, so it’s better to stretch those payments over the shortest time possible.
- Gracious Giving
We are called to give back to our community, whether that means our church or another charitable organization. Your tax money can go a long way towards helping you meet your tithing goal or helping you advance meaningful work by an organization close to you.
Most charities work on a narrow budget, so any worthy group that you choose will be grateful for your kindness. Remember, we are given in direct measure to what we give. Take this as an opportunity to give bountifully.
What will you choose to do with your tax refund? By remembering the many worthwhile ways to put your money to work, you can make tax season less stressful and receive and disburse your refund more joyfully. Change your financial outlook, build a firm foundation, or give of the wealth that you have received.
By spending or investing responsibly, you’ll make your tax return last a lot longer.