5 slick ways to use your 2015 tax return

Before you blow that sweet chunk of cash, read these five suggestions. There might be something much better to do with that tax return.

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  • For many of us, tax season has already begun. This is the time of year when accountants advertise that billions of tax dollars have been collected worldwide which can now be claimed by you — the workers who paid them in the first place. For many families, it's tradition to take a nice chunk of change back from the tax man and buy a fancy doodad that wasn't in the budget mere months before.

  • But why waste a windfall on a new, 1 centimeter thick television when you already have a perfectly good TV? I understand the temptation. I've fallen prey to this societal norm in the past. Doodads and gadgets are shiny and new, and fiscal responsibility just isn't quite as fun as a smartwatch that you'll use five times before you forget you ever bought it. Don't let this year's tax return slip through your fingers in the name of retail therapy! Here's a list of five better ways to use your tax return than on a matching pair of tablets for you and your spouse.

  • 1. Knock out leftover holiday debt

  • I'm always amazed to hear people tell me about their consumer credit card debt after Christmas. We can all go a bit overboard buying presents at the end of the year, but many people forget that their tax returns may be just enough to pay those debts off completely.

  • Of course, feel free to pay off other debt while you're at it. Tax returns can be a new thing for young families who have just finished college and hit the world of full-time work. If you or your spouse have student debt, take a chunk out of it with your tax return money. Paying off your debt now will give your family financial peace of mind later.

  • 2. Stash your cash

  • Absolutely every family needs emergency savings. Rainy days happen to all of us, so if you have no debts to pay, use your tax return to start or supplement an emergency savings account. What makes this account so special? It's only for real emergencies. One easy way to make sure it stays that way is to use a separate bank or credit union for this particular savings account. Keep it out of sight so you can keep it out of mind when you want to make an impulse purchase on $300 trail-running shoes.

  • 3. Start a conservative investment

  • Say you don't have any debts and your emergency savings account is enough to cover several months of expenses. If you're in this boat, congratulations! You are already above average when it comes to personal finance. Now don't mess up by splurging on a pair of diamond earrings that your toddler is just going to tear out of your earlobes and drop down the toilet.

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  • This year's tax return is your chance to make a conservative, long-term investment. Look at your options. A certificate of deposit (CD) or low-risk mutual fund may be the perfect environment for your money to grow in. Both will beat the minimal interest rates available in savings or money market accounts. You may even want to open an IRA and let that cash grow with decades of compound interest.

  • 4. Give it to your children

  • If you have taken care of your own needs, it's a good idea to think of your children's futures. Not only can this money help your children afford education or cover the costs of moving out some day, but opening a savings account in your children's names gives them a financial history and establishes a good life habit of liquid savings. You may also want to consider opening a CD or mutual fund for your children so the money can grow more, especially if your kids are quite young. Your kids will appreciate the help paying deposits on their first apartments more than $300 headphones.

  • 5. Take a family trip

  • Some years are just harder than others. We all feel the need to be rewarded for our efforts, and a tax return can be a huge reward for hard work. If you have no outstanding debt, going on a family vacation may be the perfect reward for you and your loved ones. This may seem contradictory (since I told you not to buy a gizmo), but I believe in buying experiences instead of things.

  • Time is a resource that is more valuable than money. You exchange your time with your family in order to work and earn money. So, if you get more of that money, use it to spend time with your family. Today's new smartphone is tomorrow's dusty 8-track player. But today's trip to Yellowstone is tomorrow's fond family memory. If you're going to splurge, do it the right way. Do it together.

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