5 Ideas for Your Tax Refund in 2014

Simple strategies to consider for your tax refund in 2014.

Jan 31, 2014 at 6:34PM

If you're slated to receive a tax refund in 2014, you may wonder how to best use the money. Here are five strategies to consider for your tax refund dollars.

1. Spend a small percentage
Take 10% of your tax refund and spend it on something for yourself. Doing so will help you stick to your plans for the rest of the money. If you're too strict with yourself, you might be more likely to fall off the financial wagon. The average tax refund for 2013 was roughly $3,000, according to the IRS. If you receive the average $3,000 tax refund, spend $300 of it but use the remaining $2,700 wisely.

2. Pay off high-interest debt
Put your tax refund to excellent use by paying off any outstanding credit-card debt. If paying it all off isn't feasible, then consolidate your debt. Several credit cards offer 0% on balance transfers. For instance, Citigroup's (NYSE: C) Citi Simplicity card and JPMorgan Chase's (NYSE: JPM) Slate card offer 0% on balance transfers for 18 and 15 months, respectively, and no annual fees. If you qualify, transfer your balance as soon as possible. Then immediately set up and stick with a monthly payment plan. Discipline yourself to pay off the entire balance before the 0% time clock is up.

3. Build your savings account
Bolster your emergency savings so that you have at least three months' worth of living expenses socked away. Money market or savings accounts will provide you with the best rates. For example, American Express' (NYSE: AXP) high-yield savings account pays 0.85%, and Capital One Financial's (NYSE: COF) Capital One 360 offers a 0.75% annual percentage yield. Both accounts boast no minimum balances and no fees.

4. Fund a Roth IRA for 2014
Get a jump on this year's Roth IRA contribution. Sure, you have until April 15, 2015 to make your contribution for the 2014 tax year. But don't wait. The earlier you fund your Roth IRA, the more months of tax-free growth you'll accrue. That can amount to a significant sum of money -- and considerably impact your retirement savings over the long term. Find an online broker here.

5. Revisit your tax withholdings
Assess why you're getting a tax refund. When you receive a refund, it's only because you've overpaid to Uncle Sam throughout the year. He has essentially used your money all year long. Don't stand for that another year. Either discuss your situation with a tax professional or tackle the issue yourself.

Foolish takeaway
Put your tax refund in 2014 to good use by employing these strategies. Making small steps toward improving your financial situation today can make a big difference later in life.

The No. 1 Way to Lose Your Wealth Without Even Knowing It
You’ve fought hard to build wealth for you and your family. Yet one all-too-common pitfall could completely derail your dreams before you even know it. That's why a company The Economist hails as "an ethical oasis" has isolated five simple questions you must answer to ensure that your financial future is really secure.

Can you answer YES to all five of these eye-opening questions?
Click here to find out -- before it’s too late!

Nicole Seghetti owns shares of Citigroup and JPMorgan Chase. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends American Express. The Motley Fool owns shares of Capital One Financial, Citigroup, and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers