Today's Smart Investor tip comes from Bruce Wingrove, an Ameriprise Financial Advisor in Midvale, UT:
This year, taxpayers received an average $2,700 in refund money –– not exactly chump change, but still no match for the average $7,000 credit card and $25,000 student debt tab most consumers have.
So, how do you make such little money go far enough to make an impact?
Wingrove recommends divvying up your refund into thirds, freeing up $900 for three different expenses.
" First of all, it’s always a good idea to begin or add to retirement accounts like an IRA. If circumstances allow, I often recommend at least one-third of the refund go here," he says. " Next, consider resolving any smaller debt that can be paid off with part of the refund. It always feels good to pay off a bill doesn’t it? Think about dedicating another third of the total here."
As for your last slice of refund pie, you've got some wiggle room. Use the cash to invest in a life experience, like a trip you've been meaning to go on with your spouse, or something that will improve your quality of life.
" I’m a big believer in spending a little money on yourself as well," Wingrove says. " Invest in something that will increase your quality of life. Perhaps that new mattress, or expensive blender that makes healthy smoothies. Or buy that exercise equipment you have been wanting or pay for that one-year membership at your local gym or use the money for yoga classes."
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