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Step 1
Reduce debt. Your number one financial goal, hands down, should be to pay down debt. Think about how good it will feel to write a huge check to that credit card company and the peace of mind that will follow.
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Step 2
Build your emergency fund. If you are debt-free, use your tax refund to build your emergency fund, which should be about 6-8 months worth of your expenses. This money will keep you afloat in case of job loss, medical emergency, or other unforeseen bills.
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Step 3
Fund your IRA account. After April 15th, you can begin contributing to your IRA account for the current year. Whether you have a Roth IRA or Traditional IRA (if you have neither, OPEN ONE NOW), you can put up to $5000 into the account per year.
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Step 4
Just save it. If you're debt free, you have your emergency fund in place, and you've contributed the maximum amount to your IRA, put your tax refund into your savings account and watch it grow interest.
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Step 5
Treat yourself. While it's important to spend your tax refund wisely and invest in your future, it's also a good idea take a small portion (maybe 10%) and treat yourself. After all, you work hard and deserve it.
