Healthy Uses for Your 2014 Tax Refund

The following post comes from the Military Saves Blog.  Follow them on Twitter and Facebook.

By Meghan Northcutt, AFC ® Candidate, FINRA Military Spouse Fellow

It’s that time of the year when you have filed your taxes and your refund check is expected to arrive soon. It’s important to have a solid plan for using your tax refund, because this money can be used as a tool for yourself and your family. Let’s take a look at some healthy uses for your tax refund.

  • Add it to your annual spending plan: According to CNN Money, 2014 tax refunds are averaging at $3,034 which is up 3% from the same period of time last year. Dividing your tax refund by 12 can add a significant budgeting advantage to your monthly spending plans. Using the average refund, you could add $252.83 to each month’s budget.
  • Reduce Debts: Reduce debt by putting your tax refund toward high interest debts, such as credit cards. Review your statements to see the time frame required to pay off your debts using only minimum payments to choose which debts to pay first. The National Foundation for Credit Counseling shows that paying a bill for $1,424 using a minimum payment of $28 per month will take 12 years and a total of $2,662 including $1,238 of interest to pay off. Consider paying more than the minimum balance if you want to pay off debt quicker.
  • Savings: The recommended amount to keep for a “rainy day” fund is between 3 and 6 months of post-tax income, according to Mint.com. There are many types of savings accounts, and it’s important to look for one that suits your lifestyle. Some banks or credit unions will reward you with a gift card or credit to your account for reaching specified savings goals, but make sure you are not getting stuck paying fees.
  • Retirement: SaveandInvest.org suggests that saving for retirement is a key step to having a secure financial future. In addition to retirement-savings plans at work (401k, 403b), you may think about contributing to an IRA, or Individual Retirement Account. If a spouse is not working, you may still be able to contribute to an IRA on their behalf. It is recommended that you compare your options and compare fees prior to choosing the IRA administrator.

Regardless how you choose to save and use your refund, taking the America Saves pledge will help hold you to your savings goal, by providing information and resources including a monthly newsletter that can serve as a reminder to save. So take the pledge today!

Take the Pledge

I pledge to save money, reduce debt, and build wealth over time. I will encourage my family and friends to do the same

Take the America Saves Pledge

Tip of the Day

  • Written by Katie Bryan | November 23, 2013

    Tip to #Save: Pay off Credit Cards as Soon as Possible. http://ow.ly/FJyDM via @Bankrate

Saver Stories View all »

Taking Back Control Over Finances

Written by Virginia Saves | August 5, 2015

After becoming a Virginia Saver and getting help from BankOn classes and coaching, Nadine Bialo took back control over her financial affairs.

Read more...

Starting Over

Written by Katie Bryan | October 28, 2013

Until last summer, Michael Lindman spent money freely. “I was a union truck driver for 35 years and had a good income,” said Lindman. “I owned my own home, saved a little, and tried to live within my own budget. You always think there’s going to be that much coming in, but things can change in a split second.”

Read more...

Jump-Starting a Financial Makeover

Written by Katie Bryan | October 28, 2013

Nichelle Johnson, a single mom with two teenage children, knows what it’s like to stretch a dollar. When she moved back to Virginia Beach in 2008, she provided for her family with just a part-time library position.

Read more...

Receive Updates

Sign up for Texts

Written by Tammy G. Bruzon | July 15, 2014

Sign Up

Sign up for Emails

Written by Super User | September 16, 2013

Get Emails

Take the Pledge

Written by Super User | September 16, 2013

Start Saving