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Wealth Management Team

April 21 , 2016

5 Tips To Make Your Income Tax Refund Go Further


So, you got a refund from Uncle Sam.

Before that lovely check burns a hole in your pocket or puts a huge new television on your wall, let’s talk about how to stretch that money a little further so that you can, in the words of Liz Lemon, “do that thing that rich people do where they turn money into more money.”

Save Some For Retirement

We know this may sound like a buzz kill, but it’s actually the best way to keep the good times rolling well after you’re done working. Retirement accounts like 401Ks, IRAs and Roth IRAs are great investments if you’re looking to save up some cash for when you finally clock out. Take our advice and put some of that refund in a safe place so that when you want to travel the world or win Grandparent of the Year, you have the money to do it.

Keep in mind: Some retirement accounts require a minimum contribution, so you’ll want to make a plan if your tax refund doesn’t quite cover it all. Your financial advisor can help.

Invest It

Sure, it doesn’t bring quite the same satisfaction as walking out of your local Buy More with a big purchase in hand, but investing is the smart, long-term move. While it may require patience, investing can help you increase your net worth, allowing you to earn the additional money you may need in the next few years without working harder for it.

It must be said, though, that investing can be risky, depending on your method. Weigh your options and pick the investment plan that’s right for you. Our wealth management team can help with that.

Pay Something Off

If you’ve got some outstanding debt—say credit cards, your student loans or a mortgage—use your tax refund money to take the edge off. You’re paying interest on your debts, so the sooner you pay off even a portion of them, the more money you’ll save in the long run.

What Not To Do

Paying taxes is a hard lesson in “adulting”, and managing your tax refund is just as important. What you do with your tax return is entirely up to you, so make a point to meet in the middle when it comes to impulse purchases. Don’t blow it all in one place (unless it’s your retirement fund). Also, don’t think that a huge tax refund is the best way for your money to work; consider adjusting your withholding and using the money that isn’t taken out of your check to work on your investment strategies all year long. After all, letting the government hang onto that money interest-free in the interim isn’t doing you any good. It’s your money, so make it work for you.

And then buy yourself something nice (but small and affordable).


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