According to the IRS , the average refund is $3,120. Additionally, nearly 8 out of every 10 American’s that filed a return received a refund. In order to save $3,120 in a year, you would have to save approximately $260 a month, or $130 every two weeks. I don’t know about you, but I try to save about 10% of my pay every two weeks, but some how at the end of the month or the year, that is NOT what is what I have left in my bank account at the end of the year, ARGH!

Now, as I stated, I find it very difficult to save money over a long period of time, without touching it. So if this is the case for you, not adjusting your withholdings may be the best idea for you. But if this isn’t the case and you find that you save money just well, you may want to adjust your withholdings so that the government is taking less money out of your check. Now, I’m sure there is somebody out there that is going to disagree with me, because OMG what if you don’t have enough taken out and you end up owing at the end of the year. So I would definitely recommend consulting a tax professional or your accountant before making any changes to your tax forms.

I may be a bit OCD, but how fair is it that the government gets to take and keep our money all year, without paying us anything for the money they are borrowing from us? Because that is exactly what is happening, don’t be fooled! The government is using our money (interest free, might I add) and paying bills or loaning our money and making money off of us. THAT’S NOT FAIR! So again, if you find that every year you are getting this large sum of money back, you may want to consult someone about changing your withholdings.

For those of us that choose to continue to let Uncle Sam take advantage of us, the least we could do is use the money wisely when we receive it. According to a study published by CNN Money Americans plan to use their tax refunds in the following ways:

Photo Credit: CNN Money, “How do Americans spend their tax refunds.” http://money.cnn.com/pf/storysupplement/tax_refunds/

I just want to provide a few different options that you should look into on HOW to spend your savings/earnings to make more money for yourself:

1. College Courses: Here in my local city, it costs about $110 per credit hour. If you were to take a full course load (12 credit hours), that would cost about $1300… plus books and fees you would probably spend about $1700- $2000. You could be well on your way to obtaining a higher education with your tax refund check.
2. Pay your car note for the year: $3,120 broken down over 12 months is $260 a month. That could definitely pay me up for most of the year! What I would give to have almost an extra $300 a month breathing room in my budget.
3. Car Insurance: If you spend between $150-$200 a month, that totals $1800- $2400 per year. I know I hate paying my car insurance every month, so why not pay it upfront?
4. Pay down debts: Have you accumulated credit card debt or hospital bills over the year? Why not make a large payment on those cards to knock down your balances? Especially if your 0% Interest promotion is coming to an end.
5. Down-Payment for a House: Sure, $3,000 doesn’t sound like a lot of money, but if you qualify for an FHA loan, they only require a 3.5 percent down payment. If you purchase a home at $85,000, a 3.5% down payment would only be $2,975! Wow!

These are just a few different ways you can use your tax refund to set yourself up for a financially responsible fiscal year. I know it may be hard, especially when you’ve been wanting that new furniture set or that new purse, but I promise you, your future self will thank you.

How do you plan to use your tax refund this year? Inquiring minds want to know! 🙂

XO