Getting a tax refund or bonus?

So you just got a bonus or a sizable tax refund. Congratulations! Before you run off and blow the whole lot celebrating, take a look at some things you can do to help make sure you have something to show for it — months or even years down the line.

Settle your debt

The Consumer Financial Protection Bureau estimates that Americans pay about $1,000 each in credit card interest and fees.¹ Using your bonus to pay off a credit card could be one of the smartest moves you make.

Get your house in order

Your year-end bonus could make a difference getting your current mortgage into the black, if you’re currently in the red. Which means you could take advantage of some of the lowest mortgage rates on record by refinancing. It’s the best of both worlds — you get to put the money toward your home’s equity, and it gives back to you in the form of interest savings.

Get your accounts in order

Most banks will waive your checking account fee if you meet a minimum balance requirement. If the money from your bonus beefs up your account enough to meet it, those savings could amount to more than you’d earn in interest on the same amount of money if it were in a savings account.

Wise investing

You’ve thought about investing it, right? Depending on your comfort with risk, there may be many investment vehicles with the potential to help make your bonus grow over the years. Purchasing instead of selling may be one of the best methods of rebalancing the portfolio. Speak to a financial professional to find out more.

Spend it on retirement

If you haven’t reached the contribution limits on your 401(k) or traditional IRA, putting your bonus into one of these plans can be a really smart move. You’ll defer taxes on your contributions, build up your savings and possibly compound them with future earnings. And depending on your employer’s 401(k) matching contribution policy, you could effectively double the money you put in.

Start saving for college

College fees are now more than most people can comfortably afford. If college is in your future — whether it’s for you, your spouse or your kids — then contributing to something like a 529 plan is a great move. Saving for college in advance can make the expenses much more manageable.

Splurge

Of course, it’s important to enjoy it now, too. So budget some of your bonus for something fun. Once that’s out of your system, take the rest and put it to good, long-term use.