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Tax refund: It’s your money. What are you going to do with it?

The average tax refund in 2017, according to the IRS, was $3,120. If you’re like 11 percent of your fellow Americans, you earmarked that money for a stellar vacation. Or maybe you’re with the 6 percent who made a splashy purchase like a new TV.

There’s nothing wrong with rewarding yourself, but consider how your life and financial situation could benefit from that cash influx if you chose one of these options instead:

Buy a home. Put the refund toward a down payment on a house. First, you force yourself to save by building equity in an asset that, historically, has increased in value. You also get the added bonus of living in a place you can call your own. Ideally you’ll put down 20 percent. But you can purchase a home with less, and there are some programs available that offer down-payment assistance if you meet the eligibility requirements. If you like this option, talk to one of our local lenders about applying for a mortgage.

Pay down debt. Think of all the money you could save by using your refund to shrink or pay off high- interest debt, such as credit cards or loans. Consider paying more on your mortgage principal, which can shorten the length of your loan and save you interest. The extra money can go a long way toward helping you better manage your short- and long-term obligations.

Improve your home. Choosing the right home improvements, such as kitchen and bathroom remodels, can increase the value of your home, which increases your equity. A tax refund can be the spark you need to get the project off the ground. You can supplement the cost of the project with a home equity line of credit or a mortgage refinance. According to the 2017 Remodeling Impact Report from the National Association of the Remodeling Industry and the National Association of Realtors®, some projects offer excellent return. Wood flooring has an average 91 percent of costs recovered after a sale!

Start an emergency fund. There’s peace of mind and financial value knowing you have money to cover the unexpected, such as home and car repairs, job loss and medical bills. Building an emergency fund can help you avoid going into debt. Your refund can provide a boost toward ensuring you have enough to cover at least three to six months of living expenses, but you might want more based on your situation.

Build savings. The IRS makes it easy. You can submit Form 8888 when you file your return and tell the IRS to save all or part of your refund. The money can be deposited directly into a deposit account, an IRA, or can be used to purchase U.S. savings bonds. You can have the IRS split your refund between up to three accounts. According to assessments of the 2016 Federal Reserve Economic Well-Being of U.S. Households report, Americans have a median savings balance of $5,200. The average tax refund would boost that significantly.

Invest in yourself. Use that refund for professional development to improve your on-the-job skills. You become more valuable in your current position and more marketable in your next one. Or use the refund toward getting a degree at a university or technical college. College graduates earn, on average, $1 million more in lifetime income than high school graduates.

Plan for next year. If your refund is sizeable, it’s possible you’re withholding too much. Put your money to better use by doing some of those things mentioned earlier – pay down debt and avoid interest, or invest it and give your money a chance to grow. You shouldn’t consider a tax refund a forced savings account when you can benefit more with the money under your direction.

Whatever you decide to do with your refund, think about your whole financial picture before you move or use it. If you’re unsure of what to do, we’re here to listen to your needs and goals. You can count on our bankers to offer expert guidance so you can make the best decision for your present and future.

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