If you’re getting a tax refund and wondering what you can do with the money, we’ve got some ideas for you. Putting some or all of this towards your future - assuming you don’t need it for basic necessities - means you’re making your money work for you, and that’s literally the best gift you can give yourself.
Learn more about the top 4 things we suggest using your tax refund on. You’ll be glad you did.
1. Meet With a Financial Advisor
Working with a Certified Financial Planner (CFP) or Financial Advisor is a great step towards confidently planning for your future. A good advisor will be able to guide you in making smart investments so you can start a path to saving. It’s something everybody should do if they have the money.
A skilled and experienced CFP will show you how to put together a list of financial priorities and make a savings plan of action. Consider hiring a CFP if you’re looking for ways to better manage your budget, plan for your future or cut expenses out of your monthly household cash flow.
PRO TIP: Finding a good Financial Advisor doesn’t have to be daunting. Talk to family and friends in your local area to see if they have any recommendations. This is always a good starting point for finding somebody you can trust who’ll help you make your money grow.
2. Write Your Trust or Will
Having an Estate Plan, or at the very least, having a Will or Trust, is a good start towards making a plan that’s designed to protect you both now, and in the future. The more complete your Estate Plan is, the better. A Will, a Trust (or both!) can save your family and loved ones the emotional toll it takes to settle an estate with no guidance or direction from you. From naming beneficiaries, to ensuring your last wishes are known, your Estate Plan can be peace of mind that you’ve done everything you can to take care of your estate and legacy in the future.
Even if you don’t have a huge estate or millions of dollars, having a Will and Trust means you’ve been able to document what everyone should know about how you’d like your legacy to be handled. Who will get assets and property, who should care for your children, even what medical care you would or would not want, can all be expressed through a complete, comprehensive Estate Plan.
PRO TIP: Setting up a Trust or Will has never been easier. Online Estate Planning companies like Trust & Will are making the process simple, quick and most importantly, affordable. You can set up a Trust or write your Will in just a few minutes with a few clicks.
3. Set Up Your Digital Legacy
We live in an age of digital ownership, where passwords and computers are our lifeline to connectivity. But what happens when we pass away? Have you set up a process so the people who need it will have access to all your digital information?
Digital assets are more than just your online bank accounts. They include everything from photos and music, to email accounts, to social media accounts, to investments and retirement accounts, and more. If you don’t have a digital legacy plan in place that grants access to specific, designated people in your life, you’re setting up your loved ones for unnecessary stress after you pass away.
PRO TIP: A password vault is a digital program that allows users to store passwords and usernames for all their digital accounts. Also known as a password manager, password vaults can be accessed with one single username and password combination, and they’re securely stored in an encrypted format, so you don’t have to worry about breaches. You can store credentials to a password vault in your Estate Planning documents.
4. Start (Or Add to) a 529 College Savings Plan
College is likely one of the biggest expenditures any of us will face for our children. Setting up a 529 College Savings Plan as soon as you can after you have children is not only smart, it’s financially responsible. Even if you can only add a little bit at a time, saving now for your children’s college is an investment you will not regret.
529s are qualified tuition plans that let you put money away for future educational expenses. Unlike some other savings plans, 529s have substantially higher contribution limits and while they’re not tax deductible, the money in a 529 does grow tax-free and it won’t be taxed when you use it for educational purposes.
PRO TIP: One of the best ways to accumulate and grow a 529 account is to start as soon as possible. You should set up automatic contributions to be deposited monthly, and be mindful about how much you’ll pay in fees. Look for a 529 program that offers low-cost options. And remember, you can increase contributions as you have life changes like a new job or when children no longer need daycare, or after you receive tax refunds, inheritances or bonuses from work.
If you don’t have immediate needs for your tax refund, consider putting it to use toward any of the above ideas. The peace of mind you’ll give yourself, knowing you’re being financially smart by planning for the future, is worth every penny.
Have questions about how Trust & Will can help you put a plan in place today that will set you up for tomorrow? Reach out to learn more about our online Estate Planning services.