It is April 15th and some will receive a much anticipated tax refund. The average refund is $3,500. What should you do with it? Some use this as a savings strategy knowing that money will come in handy about this time of the year. Thus, they know it is coming and it is already spent.
My advice to you would be simply to do away with the tax refund once and for all. Take this last tax refund and spend it however you see fit. Then adjust your holdings so this never happens again. Why would you want to give the IRS a tax free gift?
Instead enjoy the benefit of increasing your after tax MONTHLY cash flow. It is much better to receive that money throughout the year in the form of cash flow versus a one-time lump sum. If you still want to save that money, you can still put that additional money into a savings plan each month.
At least afford yourself the flexibility to use that additional monthly income and put it to good use. If you needed it during the year, wouldn’t you want access to it? Plus, most people tend to not spend lump sums effectively. They know that they need to pay down debt. However, they see a vacation in their instead. It is the emotional pull of the lump sum of cash.
The bottom line is to use your cash flow wisely versus allowing the IRS to benefit from your cash flow.