Joey Mustain

Are you getting a tax refund this year? If so, what should you do with it?

You could put it in your IRA. Last year’s average refund was about $2,700 according to the Internal Revenue Service. If you got that much this year, you’d have almost half of the annual IRA contribution limit of $6,000, although you can contribute up to $7,000 if you’re 50 or older.

You could also use some of your refund to invest in a college fund. Or, you might want to pay some premiums on your life insurance or long-term care policies.

As an alternative, you could use the money to pay down some debts. The lower your debt load, the more you’ll have available to invest for the future.

One last suggestion: Consider using your tax refund to help build an emergency fund containing six to 12 months’ worth of living expenses. With such a fund, you’ll be less likely to dip into long-term investments to meet short-term needs.

You can help yourself make progress toward several financial goals with your tax refund – so put it to good use.