Tax season is just around the corner ... while splurging on a vacation or new pair of shoes is tempting ... here are some tips on what could be the better option for you in the long run.
Greg McBride, CFA, senior financial analyst, Bankrate.com
"Because the tax refund is the biggest windfall that many people get all year long there's certainly the temptation to go out and spend it and unfortunately this windfall that you get is really something that could be put to better use, using that to make some financial headway."
To make this financial headway you can pay down high cost debt such as credit cards. The more you pay off now the less you have to worry about next month.
If you don't have any debt ... instead you can pad that much needed emergency savings fund for a rainy day.
Or increase your retirement contributions. By tucking your refund away you won't be tempted to spend the money in other ways.
Although these tips may seem routine ... they are the best option for your well-being today and the economies well-being tomorrow.
"When people save or pay down debt, in the short term that's a negative for the economy, because our economy is powered 70% by consumer spending, but in the long run, we're all better off if American consumers have less debt and more savings. So we're going to have to take some pain now in order to have some gain later."
After considering these tips, Bankrate.com was interested to see what people like yourselves would be doing with their tax returns ...
"I will probably be paying down some debt. I definitely accumulated some debt over the last few years and this will be a great way to reduce some. I expect a sizeable refund so I think I'll probably put almost all of it if not all of it, back to help get me back on my feet."
"That's tough because I'm an intern, I don't have to pay taxes."
"Well if I were getting money back I'd probably save it or spend it on bills but since it looks like I'll be paying more into the income tax, I won't have any coming back."
"Save it for sure."
For more information on taxes just go to Bankrate.com under the taxes tab. I'm Theresa Heintz.