“Many times, getting a lump sum of money leads us to feel some sense of freedom for spending. It’s okay to use part of your refund on something fun, but don’t forget to look at ways that money can make your life a little easier down the road,” said Sissy Osteen, Oklahoma State University Cooperative Extension resource management specialist.
According to the IRS (www.irs.gov), taxpayers received an average refund of $3,034 in 2014. Whatever the size of your refund check, here are three solid ways to make those funds work for you in the longer term.
Pay off high-interest debt. Let’s face it. It can be difficult to make meaningful headway on credit card and loan balances when you are only covering the minimum payment.
“Only paying the minimum each month means most of that money is eaten up by interest,” Osteen said. “Windfalls like your tax refund give you an opportunity to get ahead by applying a lump sum against the amount you owe.”
Create or add to your emergency fund. In the event of an unexpected bill or loss of income, it is nice to have a cushion to soften the blow to your budget. That is where an emergency fund comes into play.
“Work toward building up enough of a fund to cover your expenses for at least 3 months,” Osteen said. “This will take the pressure off your budget and help you avoid borrowing from friends and family or using your credit card in the event an unanticipated expense pops up.”
Establish or advance your investing goals. Big, long-range savings goals like building a retirement fund or paying for your children’s college education can seem overwhelming. But, the reality is any amount of savings is better than nothing.
In 2015, the maximum contribution an individual can make to either a Traditional or Roth IRA is $5,500. If you are over 50, you can set aside an additional $1,000 for a total contribution of $6,500.
An initial deposit of $1,000 is a good start for an IRA. For information on the Oklahoma 529 College Savings Plan, visit www.ok4saving.org or call 877-654-7284.
“The important thing is once you set that money aside, keep adding to it bit by bit,” Osteen said. “Even if you’re putting in a modest amount regularly, it adds up quicker than you think.”
For more tips on ways you can save your tax refund, contact your local county Extension office.
###
Oklahoma State University, U.S. Department of Agriculture, State and Local Governments Cooperating: The Oklahoma Cooperative Extension Service offers its programs to all eligible persons regardless of race, color, national origin, religion, gender, age, disability, or status as a veteran, and is an equal opportunity employer.
REPORTER/MEDIA CONTACT:
Leilana McKindra
Communications Specialist
Agricultural Communications Services
140 Agriculture North
Oklahoma State University
Stillwater, OK 74078
Phone: 405-744-6792
Fax: 405-744-5739
Email: [email protected]
