What would you do with an extra $3,000? If you’re like many people, you might get that amount as a tax refund for 2017.
You probably don’t have to think too hard about how to spend that money. But what do financial pros recommend?
- Pay down your debt: “Tax returns are the perfect way to jump-start that goal of getting out of debt. You could also use it to get ahead of any monthly payments you may have such as loans, mortgages or car payments,” says Leslie Tayne, a Melville attorney specializing in financial issues.
- Save it: Build your emergency savings fund, if you don’t have at least three months of expenses stashed.
- Contribute to your retirement account: “Contributions to a 401(k) or traditional IRA will reduce your taxable income on next year’s return. You have until April 17 to contribute to an IRA,” says Joshua Zimmelman, president of Westwood Tax & Consulting in Rockville Centre.
- Open a college savings plan: If you are not planning to invest in your own education, do so for your child. “While implementing a monthly savings plan toward college is often advisable, making additional lump-sum contributions from your tax return may help speed up the achievement of this challenging financial goal too. Research the benefits of a 529 plan,” says Joel Russo, president of Premier Financial Group in Wall, New Jersey.
- Give yourself a small treat: Don’t splurge on an extravagant vacation, but a weekend getaway to recharge yourself is a worthy investment. Says Lance Christensen, a partner atMargolin, Winer & Evens in Garden City: “After funding short-term goals, any amount left should be used to reward yourself.”