Save or splurge?Getting a tax refund? That’s awesome! If you’re like most Americans, the decision about how to spend it can be a real battle.
According to a recent Bankrate.com poll, refund recipients intend to use the money to improve their financial future rather than their immediate comfort. The poll says 84 percent of American taxpayers intend to pay down debt, save, invest their windfall or use it to pay for necessities. Only 7 percent want to spend their refunds on a shopping spree or vacation.
Last year the average individual federal income tax refund was $2,792.* Don’t get caught treating your refund any differently than you’d treat your paycheck. Use it carefully and perhaps give the money a long-term purpose. To get started, consider your priorities first. Is it retirement savings? A down payment on a
new home or a new mountain bike? Second, consider these three savings options to make the most of your refund:
Keep it for a rainy day:Do you have a safety net — enough cushion to cover unexpected expenses such as home or car repairs? If not, start or increase your emergency fund. Ideally, you should have enough savings to cover three to six months of living expenses in an easily-accessible interest-bearing account like a Rockland Trust
money market account. So consider using your refund to make a significant deposit in your emergency fund.
Separate your savings from your checking account:Do you or a family member only have a
checking account? Consider opening up a
savings account to earn higher interest rates on your money. It’s a good tool for long-term savers, especially if you know you’ll need a car for college or want to join your friends and family on a cruise. So consider using your refund to boost your savings balance.
Invest in your future:Did you know the more you can contribute to an individual retirement account (IRA), the more you potentially benefit from tax-advantaged growth ― and the more progress you can make toward your retirement savings goals? IRAs and 401(k) plans are two options to boost your financial future and build the retirement you envision. With your refund, now is a good time to consider making a contribution to your IRA — or opening a new one. You can talk to a
financial advisor for help.
Your refund could be worth a lot more than you think
Before you let your tax refund burn a hole in your pocket, resist the urge to splurge and save instead. It could go a long way to improve your long-term financial health. To put your tax refund to work for you, visit one of our branches to explore the best options fit for you or call us at 800.222.2299.
