Congratulations, taxes are finished! You worked hard to meet the deadline and now can sit back, relax, and await your refund. While it is tempting to spend it on a weekend getaway or that shiny new something you’ve been eyeing, it is much more practical and beneficial for you and your kids to spend it on things that will make you breath easier when it comes to your personal finances. Using your refund to pay off debt, add to your savings or invest in mutual funds are the more obvious choices, but there are other uses that can provide more long-term benefits for the whole family.
Open a Roth IRA for Your Kids: Set up a Roth IRA for your kids. They are eligible as long as they have earned income, including things like dog walking to babysitting. Your child can contribute up to $5,500 or the amount of their income, and you can use it as a tool to start teaching them about saving for the future.
Up Your Family Home’s Energy Efficiency: Insulate your doors, add in water-saving shower heads and faucets, replace your light bulbs with energy-saving bulbs, etc. Making your home more energy efficient can drastically decrease your energy bill, improve your family’s health and lead to big savings in the long run.
Add to Your Insurance Portfolio: Fill in the gaps in your insurance portfolio by considering the important, but often disregarded insurance policies like umbrella, liability and home insurance. This will safeguard you in cases of emergency and ultimately lead to a peace of mind when it comes to your assets and your children.
Make Extra Payments to Your Mortgage: Prepaying your mortgage can reduce the principal, thus lessening the interest on your long-term note. This will save money over the long term, giving you the extra funds for a family vacation!
Invest in a Money Saving Device for the Family: Kids love ice cream? Invest in an ice cream maker and decrease your trips to the local gourmet ice cream shop. Never any time to get to the gym? Invest in an exercise bike and get rid of your membership. Getting a device to replace ongoing expenses for the family can add up to big savings.
These tax refund uses allow you to invest in your biggest asset—your family. Whether you use your refund for the benefit of your kids or towards your home, the greatest reward of investing it in a smart way is the peace of mind it brings and the long-term added financial stability.