Now that tax season is over, are you one of the over 101-million taxpayers expecting a refund? According to the Internal Revenue Service the average refund for the 2013 filings is $2,860 (as of 17 Apr 2014).
There are several more sensible ways to use your refund. Consumerist.com recently posted an article titled 10 Ways To Not Suck At Spending Your Tax Refund that provide some great suggestions for using your refund wisely. But it is their bonus point that is the one we would suggest first…change your withholding!
While it’s great to receive that fat check after filing your tax return, do you realize you are giving an interest-free loan to the Internal Revenue Service? If you expect your situation to be the same next year, utilize the IRS Withholding Calculator and adjust your withholdings on myPay.
You can also use the Single or Married withholding calculators that we have built into our budget spreadsheet in our Personal Finance Section. They are located on the fourth and fifth tabs of the budget2014.xlsx Excel spreadsheet.
Use the extra money from your adjustment to pay down debt that is costing you interest or put it into an interest earning account. Make the money work for you!