Smart Use of Tax Refunds

Financial advisers broadly agree on the three smartest ways to use those income tax refunds that are running 15% higher than last year.

"Number 1, save it," says Jim Horlacher, an independent financial adviser. "The refund would make a useful addition to your emergency cash reserve. You potentially save more cash to meet unplanned expenses than running up expensive credit card debt. Second, pay off your credit cards. Any savings you achieve by reducing typical 18% interest costs probably will be larger than what you could make saving or investing the money. Third, add the money to college or retirement funds. Opening or adding to a Roth IRA could be your most attractive choice."

Wise moves with your tax refund can really help you down the road!

Source: Meyer, G. (1999,April?). Wise moves with tax refund can help you down the road. Your Money’s Worth. The Kansas City Star, p. F4.

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