10 Ways To Avoid Wasting Your Tax Refund

Waste not want not: Well, maybe we could all "want" a bit more in our tax refund check, but wisely using this cash fulfills the "waste not" portion of this maxim.

It's tempting to use refund cash to pay bills and rent or splurge on a longed-for extra, like a long-desired automotive treat or those designer shoes you've been eying. Instead, you might consider this your opportunity to do a bit of forward planning. The average tax refund in 2009 was $2,683; That's enough money to make a big impact on your future finances. Here are 10 ways to avoid wasting your tax refund.

1. Upgrade Your Career Skills
It's no longer enough to just do a good job. We also need to continue adding to our skill sets or risk becoming a career Neanderthal. Invest in your career by learning new skills for computers, how to use social media for promotional purposes, expanding your network by attending conferences, etc.

Continuing education courses are a great way to upgrade as they're comparatively inexpensive. Community colleges also offer independent course work and many computer-training companies teach short classes that can swiftly add to your job worth.

2. Pay Down Credit Card Debt
Boring as this sounds, it's the best investment you can make, particularly considering the high interest rate and fees of credit card accounts. You'll also be investing in your peace of mind as nothing creates stress like unwieldy debt.

3. Visit The Doctor Or Dentist
Take care of yourself first, then you can take care of others. An annual check up for both your body and teeth can save vast sums in the long run. It's also another way to create peace of mind.

4. Run An Energy Audit
Whether you own or rent, an energy audit can help you save on utility costs, a gift that keeps on giving. Such audits reveal where you should seal leaks, improve power usage, add insulation and more. The minimal cost of $25 to $200 for the audit will pay off in the long run. Once you've identified problem areas, you can take advantage of the government's energy tax credit.

5. Improve Your Property
Replace your water heat or furnace before it's too late. Tackle maintenance projects that require a monetary investment. Replace outdated appliances and aging roofs or simply landscape your yard.

6. Add To Or Create An Emergency Fund
Experts recommend creating three-month's padding in case of an emergency. The sum should be based on your fixed expenses, including mortgage or rent, utilities, food, loan payments, medical costs, etc. The base amount should be roughly $1,000, then you can work your way up to the total necessary amount.

Keep your emergency fund in a separate savings account so you're not tempted to dip into it for other expenses or treats.

7. Buy Life Insurance
Since we never believe we can really die, many of us put off investing in life insurance. If you wait until you're older, the premiums increase and the return on investment isn't as good. Term insurance is probably your best bet. Life insurance is particularly important if you have family who depend upon your income.

8. Bulk Up Your Retirement Account
Begin by maxing out any accounts that include an employer match as this free money is where you'll get the best bang for your buck. If such an option isn't available, consider starting an IRA, which offers more control over your investment options than a 401(k).

9. Start Investing
It doesn't take much to begin investing, whether it be managed funds, shares or what have you. A Managed Investment Scheme (MIS) is a good place to start as a tax-effective option. It can help you manage taxes while building a healthy portfolio. Talk to a financial adviser for more information.

10. Service Your Car
An ounce of prevention is worth avoiding that dreaded "Check Engine" light on your dashboard. Visit the Car Talk site for full details as well as info on what you can handle yourself and which jobs require a professional mechanic.

While we're on the topic of income taxes, check out our blog post "9 Tax Tips For Seniors."

If you anticipate receiving a tax refund this year, tell us how you plan on spending it.

Photo by Bearman2007