taxes

7 smart ways to spend your tax refund

If your employer doesn't offer a retirement plan or you've already put in enough to meet the matching requirement, consider starting an IRA. You'll have more control over your investment options than with a tradition 401(k), and it's an easy way to turbocharge your savings, says Cecere.

"The sooner you start saving, the more time your money has to grow," she says.

6. Tackle maintenance projects. Maybe you never had the money to replace that old furnace, patch that leaky roof or replace the worn tires on your car. Use your refund to complete maintenance projects that can cost you even more if you wait.

"If you have an older home, you may also be able to take advantage of the energy tax credit," says Love. Buying energy efficient furnaces and air conditioners and replacing roofs won't just prevent problems, they'll improve your home's energy efficiency and earn a federal tax credit on next year's return.

7. Buy life insurance. If you have a spouse or children who depend on your salary, you should have ample life insurance. To get the most for your money, term insurance is probably your best bet, says Bob Petrocelli, an agent at New York Life Insurance Co. in New York.

"For a few hundred dollars a year, a 35-year-old male can create $500,000 or more of insurance protection," Petrocelli says. "For very little money, you can create a death benefit that's pretty significant."

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