How to Get the Most from Your Tax Refund

April 16th is tax day. Some will owe money to the government. Many of us will be getting a refund from Uncle Sam. Refunds can run anywhere from a few dollars to a couple of thousand.

Historically people have used their returns for various things; vacations, car or house repairs, new toys be they computers, electronics or power tools.

But have you ever considered taking that refund and investing it or "growing" it? For most people a tax return is the most money they will have at any one time during the year, and while the temptation to blow it or buy a big screen TV may be great, consider socking away some portion of it.

There are three easy steps one can take to get the most out of their money.

The first thing you need to do is assess your current financial situation. Do you have any savings? Money in a sock drawer or between the mattress? Any investments, even if it's just that savings bond Aunt Esther gave you for graduating high school?

If you do your assessment and realize you have nothing to show for however many years you've been on the Earth, don't panic. But do get serious about your financial future.

Start Yesterday!
You can't undo all the years of blowing your money or paying off debt, but you can play catch up without living the life of a pauper.

But it takes money time to grow. And your money needs to have a built in safety net. Meaning, unforeseen things can happen in your life that put a dent in your savings plan. You may become ill, unemployed, divorced or some other unexpected event may happen. When these things do happen, remember it takes money time to grow and it will take money some time to recover from those events.

Make a Plan

Decide what exactly you are saving for. Retirement? Great, but does that mean just having enough to keep your current standard of living or do you want to buy a vacation home? Start a business? Travel?

Or are your goals more immediate? Do you want to buy a house? Do you have a child getting ready for college? Do you want to go back to school?

Do you have the responsibility of caring for aging parents? How much will you need to help care for them?

Once you've figured out what it is you are saving for, you are able to make better decisions about the types of investments you will need to make.

Take a look at your monthly expenditures and take note of where your money is going. Decide what can be cut and cut it. Then take anything frivolous you've been blowing money on and put that amount toward your savings or investments. And avoid debt at all cost. We all have emergencies that may require the use of a credit card, but if you can't pay off a credit card in two billing cycles, ask yourself if you really need whatever you are buying.

If your company offers a matching 401(k) plan and you're not taking advantage of it, correct this immediately! It is free money you are missing out on! Find out about your company's plan and consult with a financial planner if you don't feel comfortable making the decision yourself.

Do a Financial Reality Check When Life Changes

Good milestones which lend themselves to a financial reality check are: marriage, birth of a child, divorce, job change, job promotion, loss of job, buying or selling a home, and moving.
Be proactive even before life changing events occur, but definitely as they are occurring. We have nine months to prepare for a baby, a marriage doesn't usually dissolve over night, and we usually have some idea we may be moving before the moving van shows up.

It may seem like this advice is meant to keep you from enjoying your hard earned tax refund. On the contrary. You should allow a portion of every refund, pay check or other financial windfall for a little fun. Just don't take the whole thing to Cancun for a vacation you won't remember!