According to the IRS, the average tax refund this year was $2,780.
We talked with financial reporter Maridel Reyes of Synchrony about smart ways to handle your tax refund.
Sure, you can just go out and spend it, but there are better ways to use it to get yourself ahead.
Funding a Roth IRA for 2018 is one of the best ways to give yourself a financial boost. A Roth IRA can do double-duty as a turbo-charged investment account – all that future growth is tax-free – and also serve as emergency reserves (in a pinch, your contributions can be backed out without penalty).
Paying down credit cards is another smart move. It’s hard to get ahead financially when you’re paying astronomical interest rates.
Adding life insurance if you have a young family is a slam-dunk (term life coverage is very expensive for most people).
Want to be debt-free sooner? Then use that tax refund to make an extra mortgage payment. Ask your lender to credit the extra payment to the principal balance.
Check out Maridel’s story for more tips, including pointers on how to adjust your withholding so you don’t make the Government an interest-free loan in the first place.