Expert tips on spending -- or saving -- your tax refund

IRS expects average refund to be $2,860
Posted at 10:02 AM, Apr 18, 2017
and last updated 2017-04-18 17:34:59-04

SAN DIEGO (KGTV) - The IRS says 70 percent of taxpayers will get a refund this year, with the average taxpayer getting around $2,860. What you do with that money is a personal choice, experts say, but they do have some suggestions.

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"Savings is always going to be at the top of the list, but it's also money you've earned," said Seth Kaplowitz, a finance Lecturer at San Diego State University. "So if it's something that can benefit you or your family, then invest in that."

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Kaplowitz said the best thing to do is save the money, especially in an emergency fund. He recommends having three months' worth of salary on stand-by, just in case.

He also said if you want to splurge on a big purchase or vacation, "Ask yourself, 'Is this something that I must have or is this something I can do without?'"

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Other options financial experts have:

  • Invest the money (either in the market, real estate or in your retirement fund)
  • Pay off credit card debt
  • Put it towards your mortgage
  • Set it aside to pay your taxes next year
  • Invest in your home with an improvement project (which could also raise the value of your home)
  • Invest in yourself or your career (training courses, health savings, exercise classes or equipment)
  • Take a vacation (to relax and de-stress)

No matter what you decide, Kaplowitz said the main point is to think about where every dollar goes and make conscious decisions, not spur-of-the-moment ones.

"I would say be cautious about how that money is spent. It should be well thought out," Kaplowitz.