For this installment of Smart Money Moves, I thought it was time to talk about taxes.  Yeah, I know–even more fun than talking about saving, right?

But maybe this will ease the pain a bit: I want to talk about tax refunds.  That’s better, right?  I thought so…

If you are expecting a refund this year (or if you’ve already received one), there are a number of ways you can use it to your advantage.  Of course, you can always do the obvious:  spend it.  Shoes, a new flat-screen, tires for the car, whatever.  But before you do that, remember that using your refund for a shopping spree–as fun as it is–won’t lower your stress level if you still have some financial burdens.  In fact, it might even make it worse.

So put a lid on your inner shopaholic and try thinking of your refund as a little present from Uncle Sam to help you shore up your financial situation.  Consider using your refund to pay off (or pay down) credit card balances or build up your rainy day fund (remember, the goal is 3 months of expenses in the bank for emergencies).  If you’ve already have these nailed, figure out if you have enough life insurance, and if you don’t, use your refund to buy more (protect your assets!).  If you don’t need insurance, then apply the refund towards a longer-term goal, like your retirement fund or your children’s college fund.

It’s found money anyway, so don’t blow it–make it work for you.  If you’re interested in figuring out the smartest ways to spend your tax refund, check out our new tool–the SimpliFi Tax Reality Check.  Just sign up and use the tool, and along the way you’ll be entered into a drawing where you’ll have the chance to double your tax refund.  Not bad for a few minutes of work!

Take care and as always, good luck!  Love, Sophie

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