What will you do with your tax refund?

It’s officially tax filing season and regardless of whether your cash back is a few hundred dollars or several thousand dollars, any amount of money can go a long way to help your personal finances. Here are some great money-smart ideas:

Pay off debt

This is especially important if you have any high interest debt. Consider paying some of it off to lower or get rid of your balance. You can save a lot of money by avoiding the interest. Consider allocating at least 25% of your return to paying of debt.

Cushion your savings

It never hurts to set aside some cash for the future or possible emergencies. Putting it into a savings account rather than a checking will make it harder to spend since it is not associated with a debit card or checks. The standard rule is to have three to six months of living expenses set aside.

Contribute to retirement

You can use your refund towards your annual IRA contribution. If you don’t have a retirement fund, now is a great time to start!

Refinance your house

It is a great time to refinance because rates are still low. Your refund can be used to go towards the closing costs.

Donate to charity

A charitable donation not only helps a worthy cause but is also deductible on next year’s taxes – and it just makes you feel good!

Service your car

Maintaining your car is very important. Been putting off an oil change or tune up because you didn’t have the money? – Now is the time to get it done. A well maintained car can save you money in the long run.

Spruce up your home

Put some time and money into your home with upgrades or a remodeling project. Increasing the value of your home increases your equity.

Time for a vacation

Of course it is okay to spend your refund check on something fun – just don’t go crazy. Look for great deals and plan a vacation in off peak times during the year. Quality of life is defiantly a worthwhile investment.