5 Ways to Make the Most of Your Tax Refund

Tax season has come and gone. If you’re still waiting on a refund (or any other lump sum payment), consider the following five ideas to stretch your dollars further.

Senior couple looking at tax documents
  1. Start a savings goal – Whether your goal is a summer vacation or buying a house, having a tangible goal makes savings more real and attainable.
  2. Pay down credit cards – Making minimum payments on credit cards often isn’t enough to get out of debt, especially with the high interest rates some cards carry. Pay off a card with a high interest and try to avoid using it.
  3. Build your emergency fund – If you have an emergency fund, use this lump sum to increase it for when that emergency hits. If you don’t have one, open one in a way you’re unlikely to use the money for a non-emergency.
  4. Open a retirement account – If you’re a millennial, retirement may seem like it’s never going to happen. But planning for retirement today makes the inevitable a lot easier. If you invest a $2,000 tax refund in an index fund at age 29, in 30 years it will grow to $20,400 (assuming the stock market continues its average 8 percent annual growth).
  5. Pay down student loan debt - It can be hard to move forward with student loan debt hanging over your head and only a small percentage of borrowers will ever qualify for loan forgiveness. Paying down student loan debt will brighten your financial future.