How Financial Advisors Recommend Using Your Tax Refund

Tax refund season is here, and many Americans are in for a pleasant surprise. Thanks to inflation adjustments, the average tax refund this year is $3,011, nearly 5% more than last year. This unexpected windfall has left many wondering how to best utilize their refunds. Financial advisors have weighed in with their recommendations on how to make the most of this extra cash.

Andrew Crowell, vice chairman of wealth management at D.A. Davidson & Co., suggests treating the refund as found money and using a third of it for something fun or rewarding. This could include taking a trip, investing in a gym membership, or making long-awaited home improvements. Crowell also encourages clients to consider philanthropic donations as a way to give back to the community.

Jasmine Butler, a financial advisor at Edward Jones, recommends contributing the refund to an IRA to jumpstart retirement savings. She also emphasizes the importance of having an emergency fund and suggests considering a 529 education savings plan for those with children or grandchildren.

Travis Anderson, a financial advisor at TBH Advisors, advises clients to review their withholdings to minimize overpayments in the future. He also suggests leveraging the strength of the dollar to plan a trip abroad or investing in home repairs. Anderson highlights the benefits of investing in oneself, such as getting a gym membership to improve overall well-being.

Brad Owen, a wealth advisor at EP Wealth Advisors, prioritizes paying down variable debt and building up emergency reserves in light of potential interest rate increases. He also recommends diversifying investments with a currency alternative like gold or Bitcoin as a hedge against government mismanagement.

With a variety of options to consider, Americans have the opportunity to make strategic decisions with their tax refunds to improve their financial well-being. Whether it’s rewarding oneself, saving for the future, or investing in home improvements, there are plenty of ways to make the most of this unexpected bonus from Uncle Sam.