It’s that time of year again! Millions of taxpayers will receive their refunds, and retailers are running tempting sales. It’s tempting to rush out and shop for a long-desired item… But what if you put that money to work for you?
It’s your money, after all. You should do with it as you please. But while a windfall can feel exciting, ask yourself if you’d prefer to put that money to work for your future.
Pay off debts. No, this is not exciting at all. But most of us do hope to retire debt-free, so dedicating tax refunds to debt repayment can be a terrific way to accomplish a long-term dream. Just think of all the money you’ll save on interest. Pay off your highest-interest debt first, and continue to address other debts in future years.
Further your earning power. Would learning additional skills or certification help you earn a promotion in the future (and therefore a raise)? What about starting a side business? Sometimes we need to invest a little money in ourselves, in order to boost our earning potential permanently.
Stash it in your Thrift Savings Plan. If you’re not already making the maximum contribution each year, here’s your chance to boost your retirement savings. As a bonus, you’ll earn a bit of a tax benefit for taking this route. Contributions to your TSP are tax-deductible, and you won’t pay taxes on the accumulating funds until you take withdrawals in retirement.
Establish an emergency fund. If you don’t already have some cash set aside in an accessible savings account, now is the time to get started. When you can pull money from a rainy day fund in an emergency, you help yourself avoid debt from credit cards and personal loans.
These are just some of the ways you can put a tax return to work for you, and build a more stable future. For more retirement planning advice, give us a call. We work closely with federal employees and understand your unique benefit system, so we can help you work toward your own personal retirement dream.
