To Save or Spend...

This tax season when your refund comes, take the time to think through your financial future. It's easier than you think! Starting a plan (if you don't have one already) takes the guesswork and stress out of money management. When you think about planning (and questions like, should I save or should I spend?), think about all the REALLY hard things you do every day...say, raise a family!

SAVE:

Plan on emergencies. Americans are currently saving less than one percent of their disposable income. That means that any unplanned expense could turn into a financial emergency. Placing your windfall money in a savings account could be the difference between a financial difficulty and a financial disaster.

Plan to grow your money. The eighth wonder of the world is compound interest. Depositing $6,000 into a savings vehicle that earns 8 percent interest can really add up. After 5 years, your $6,000 will be worth $8,939.07. After 10 years, it will be worth $13,317.84.

SPEND:

Plan to pay down debt. If you pay the minimum monthly payment of 4 percent on a $6,000 credit card debt with an 18 percent interest rate, it would take more than 13 years to repay. In that time, you would pay $3,515.68 in interest charges. Accelerating your debt payments is an easy financial decision.

Plan for the holidays. Too many people get in over their heads during the holidays and being in debt is no way to begin a new year. By saving your boon for holiday purchases, you can take advantage of lower prices and avoid post-holiday debt.

Plan on investing in YOURSELF. You are your most important and valuable asset. Use the newly acquired money to further your education or enhance a skill. Plan on giving back. If debts are under control and your savings are adequate, consider making a donation to a favorite charity. Not only is it a good thing to do--it's a tax write off.

Source: Our friends at Money Management International help us educate and inform our consumers about their financial choices. They are not accountants and cannot answer tax-related questions. For tax information visit www.irs.gov.