Updated April 10, 2019: The average tax refund is down a bit this year, but many Americans are still getting back a chunk of change from Uncle Sam — $2,873, to be exact, per the latest numbers from the Internal Revenue Service. If you're on the receiving end of one of those checks, resist the urge to splurge. Even a small windfall can go a long way toward bolstering your financial health. Here are some truly adult ways to spend your tax refund.
1. Pay off high interest debt
Nothing sinks a budget quite like credit card debt. If you're carrying a big balance or an equally expensive debt, now's the time to pay. Otherwise, you're just accruing interest — and stress. Fortunately, we've got a few ways you can expedite paying down credit card balances.
2. Buy life insurance
It’s hard to come up with any responsibility more “adult” than protecting your family in case something happens to you. Fortunately, life insurance is currently at a 20-year low — and easy to apply for. We can help you easily compare life insurance quotes across companies online.
3. Build up your emergency fund
Experts suggest having three to six months of income stashed away in case of an emergency, but even a few thousand dollars can help with unexpected medical bills or car repairs. Turbo-charge your savings by opening a high-yield savings account or money market fund. Our partner Even Financial can help you compare current products on the market.
4. Save more for retirement
Consider depositing the money into an individual retirement account. (Note: There is a maximum you can contribute each year. For tax year 2019, the limit for individuals is $6,000.) You could also up the amount of your paycheck going into an employer-sponsored 401(k) account once you've put some extra money into your liquid savings. And, if you're feeling a little risky, you could look into investment apps or digital brokers.
5. Boost your HSA
Health savings accounts help people with high deductible health care plans cover out-of-pocket medical expenses. Bonus: The funds are tax-deductible (up to $3,450 for individuals; $6,900 for families).
6. Invest in a 529 account
College is increasingly expensive, so if you've got little ones, your tax refund could get a 529 plan started. These accounts come with a host of tax benefits at a federal level. Some states offer tax advantages for using one, too.
7. Start a travel or activity fund
Blowing your tax refund on an all-inclusive getaway sounds like a blast, but what if you saved for a while first? By using your tax refund to start a travel fund, you can book a dream trip once you decided where you want to go — and saved up enough cash to cover the expense comfortably. Move that rebate from Uncle Sam into a high interest savings account to expedite your trip.
8. Invest in yourself
Maybe you want to take a course to improve your skills or get certified so you have more job security or can qualify for a bigger paycheck. Whatever it is, there are plenty of ways to invest in yourself that your tax refund could cover.
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Image: Chelsea Victoria