Prepare for Life's Surprises...With Your Tax Return

The following post has been modified from the Military Saves Blog. Follow them on Facebook and Twitter!

By now, you may already know how you want to spend your tax return. Before you’ve spent the money in your mind, think about the many challenges that life can pose. These challenges can often be eased by having some money saved.

Here are some wise ways to spend your tax return in the New Year:

A “rainy day” fund isn’t just nice to have; it’s a must-have.

A solid “rainy day” or emergency savings fund is essential when you need cash up front. Whether you need to move in a pinch, fix a flat, or – perish the thoughta member of your household finds themselves unemployed, having a strong emergency savings can help you be ready for the expensive unexpected.

Save automatically for retirement.
Saving now for retirement will ensure that you have enough money to live a comfortable standard of living when you stop or reduce the amount of hours you work. Government employees, for example, have the option of signing up for the government-sponsored Thrift Savings Plan (TSP), which comes with some great tax benefits. If you haven’t started putting money away for retirement or could add more to it this year, consider using your tax return for this purpose.

Evaluate your insurance.
Have you recently moved? Moving to a new state might mean that you need to increase your auto insurance coverage. Has your family grown this year? It might be time to increase your life insurance. Do you have adequate renters or home owners insurance? Whatever life changes have occurred in 2014, the New Year is a wonderful time to evaluate your insurance needs, protect yourself, and use your tax return to make some needed adjustments.

Plan ahead for the 2015 holidays.
If you busted this year’s holiday budget or didn’t have one from the start, consider using some of your tax refund to establish a savings fund for next year’s holiday season. Doing so will help you have the money up front for gifts, decorations, food, travel expenses, and parties, rather than using debt-creating credit cards.

Spend a little on yourself. 
Since you've thought strategically about using your tax return and your other obligations have been met, it’s okay to spend a little money on yourself – you’ve earned it. Take some time to talk about the purchase you’d like to make or the place you’d like to go. Discounts and deals are plentiful after the holiday season, so shop smart!

Whatever your strategy, make sure you plan to use your tax return wisely, keeping in mind the many surprises life can throw your way. Be resilient. Set a goal. Make a plan. Save automatically.