Considering a tax return spending spree? First, think about 8 wise ways to use money

With tax return season coming up, several businesses are vying for your tax return money and enticing you with incentives for purchases you might not normally make. You may find yourself with a larger sum of money than you typically have, and it’s important to consider ways to use your money effectively.

As you begin to determine what to do with your tax return this year, below are eight smart ways you can put your money to good use.

Invest in yourself: While treating yourself to new clothes or material things may be tempting, now is a good time to invest in your skill-set or education, which will provide ongoing returns. Investing in professional certifications or classes to enhance your subject knowledge could drive future growth in your position or guide you on a path to a new career.

You may also consider investing in a side job such as a resume writer or medical coder. Purchasing LinkedIn Premium to look for new employment opportunities can also be beneficial.

Enhance emergency fund or pay off high-interest debt: Starting or adding to your emergency fund can provide a safety net for life’s unexpected expenses. Having funds available can prevent you from having to borrow money or open a credit card to pay for sudden or unavoidable costs. Paying off high-interest debt saves you money, can increase your credit score and provides more cash in your monthly budget you can apply to other savings accounts or investment opportunities.

Invest in your children’s future: Higher education is a significant expense. By investing in a 529 college savings plan or Uniform Transfer to Minor account, you can set your child up for a future of less financial stress. Earnings from 529 plans are not subject to federal tax and generally not subject to state tax when used for qualified education expenses.

Contributions to a 529 plan, however, are typically not tax deductible. The IRS can supply plenty of resources for additional information on this. By investing in an the Uniform Transfer to Minor account, you can contribute up to a certain amount of cash each year, free of gift-tax consequences. This can include cash, real estate or other inheritances. Wealth Advisors at CommunityAmerica can help you decide what kind of savings would serve you and your family best.

Save for near-term goals: These are the events or items you are planning for in the next 12 to 18 months. Are you planning on adding a child to your family, paying for a wedding or saving for a down payment on a house? All of these are thoughtful ways to use your tax return money.

Save for retirement: Retirement may seem far away for many people, but the planning starts decades before leaving the workforce. You can consider opening a traditional or Roth IRA that could assist you with your retirement goals. Both are good options and have their own considerations for investing in your future self, even if it is a small amount at first.

Consider life insurance, long-term care: Protecting your family through long-term and short-term disability may not have the appeal of other kinds of investments. Still, they are essential in relieving financial burdens if encountering life’s most cruel or unexpected events.

Invest in your well-being: There is wisdom in using your tax return money to invest in your mental and physical well-being. Ways to invest in your health may include joining a gym, getting dinner with friends or taking a trip to reconnect with loved ones. Balance is key when investing your money, and there are several ways to diversify your investments. It does not have to be all or nothing.

Apply refund to next quarter’s tax payment: This is something to consider for small business owners. Other options may be prepaying upcoming expenses for the year, such as software services, insurance plans and IT services. Prepaying these expenses can result in cost savings in addition to minimizing your taxable net income for the year. Everyone’s personal savings goals are unique.

If you need assistance getting on the right track or digging deeper into your own financial planning, visit one of the CommunityAmerica branches to set up a free appointment with a Financial Well-Being Coach.