Use Your Tax Refund Wisely

During difficult economic times, it’s especially valuable to get any extra money. Here are smart uses for your tax refund that can improve your finances.

Build a cash cushion. Keep at least six months’ worth of expenses in an emergency fund; more if you’re supporting a family or if your job is in jeopardy.

Benefit from tax-advantaged investing. Investing in a 457 plan lowers your taxable income, and the money grows tax-deferred for retirement. If you get a $750 refund, you can actually afford to add $1,000 to your 457 plan, if you’re in the 25 percent tax bracket. Or invest in a Roth IRA, which can grow tax-free for the future.