CENTENNIAL, Colo. -- It is tax season, and more than 70 percent of taxpayers will receive refunds. The average refund is almost $3,000!
You may be dreaming of a vacation, or a new car, but money managers say slow down. That kind of money can make an impact on your financial goals.
Todd Hauer, a wealth advisor at Morgan Stanley, has five good options for what to do with that refund.
Pay down credit card debt
Paying off $3,000 in debt could save you hundreds of dollars in interest this year. “Those are the things that we want to get paid off as quickly as we can in order to get the flow going the other way into savings and investing,” Hauer said.
Add to your retirement savings
With compound interest that $3,000 could double in 10 to 20 years.
Contribute to a college savings plan
“It’s not uncommon to see a four year degree cost six figures,” said Hauer. It’s critical to start saving early, contribute regularly, and watch the investment grow over time.
Pad your emergency fund
It’s important to have enough cash to over 6 to 12 months of expenses, in case you lose your job, or need to make a big purchase..
Invest in your future
“That could be cooking classes, could be maybe you want to be a better golfer, maybe you want to take a history class,” Hauer said. If you have the other options taken care of, then it’s OK to have a little fun!