Texas Credit Union Foundation offers tips for putting tax refund to good use
FARMERS BRANCH, Texas, Feb. 21, 2013 /PRNewswire-USNewswire/ -- For Texans lucky enough to receive one, a tax refund is like an extra paycheck. For others, a refund is an opportunity to replenish their "rainy day" fund, which dwindled as unexpected expenses occurred. Still others count on a tax refund to splurge on the vacation of a lifetime.
Consider this…According to a survey by the Texas Credit Union League (League), 23.8 percent of respondents are expecting a larger tax refund this year, while 41.5 percent are expecting a smaller refund. Another 34.7 percent of respondents are expecting about the same.
The majority of survey respondents (65.6 percent), say they'll use their refund to pay down debt, while 45.9 percent of respondents will save their tax refund. Only 7.3 percentage plan to make a major purchase with their refund, and an even smaller percentage will use it to take a vacation (4.3 percent). All in all, the results point to a tendency by Texas taxpayers to put their tax refund to work for them.
"Saving or paying off debt is sound financial advice that can immediately improve your personal finances," said Courtney Moran, executive director of the Texas Credit Union Foundation. "If your tax refund is substantial enough to start an emergency fund, do so. However, if your monthly budget is weighed down with monthly credit card payments, you're probably better off to use your refund to pay the balance down."
Moran suggests using a tax refund for one or more of the following:
- Start a "rainy day" fund. The term "rainy day" is misleading, as unexpected financial woes happen in any weather. Car repairs, home maintenance, and health expenses always occur when they are least expected. Putting money aside helps you manage the unimaginable.
- Pay down a credit card or loan balance. Nothing hampers a budget like interest-laden monthly loan payments. Whether in the form of a credit card minimum amount due, or repaying a home equity line, shrinking your balance due can minimize your payment and shorten the life on the loan.
- Invest it long term. The further away you are from retirement, the more your refund can benefit you. Talk to a credit union about long term investment options, and watch your money grow.
- Invest it short term. While returns on short term investments, such as certificates of deposit, are at record lows, they are still safe and earn interest. If you are looking to make a major purchase in a year, investing short term can grow your refund into a generous down payment.
- Start a college savings plan. If your children have college aspirations, consider using your refund to start an education savings plan. The cost of attending college is forecasted to rise significantly over the next decade, so saving for higher education now is smart.
TCUL is currently asking Texans if they are considering purchasing a home or car in 2013. That survey can be taken online, at https://www.research.net/s/MarPoll.
Media elements: Pie charts available online, at http://www.tcul.coop/consider_this.html.
About Texas Credit Union League
The Texas Credit Union League is the state trade association serving more than 500 credit unions in Texas. Organized in 1934, the Texas Credit Union League supports credit unions, not-for-profit, member-owned, volunteer-directed cooperatives, which in turn are owned by nearly eight million members. For more information, visit www.tcul.coop.
SOURCE Texas Credit Union League