Top 3 Things College Students Should Do with their Tax Refunds

You’ve just filed your tax return and “woo hoo!” you’re getting a refund! That Apple watch is looking pretty good and it’s now within your reach, but, not so fast! Careful consideration of where you spend this bonus money is key to your future financial health. In fact, getting into the habit of making strategic choices about your income will position you well for future success. The average refund for a college student is around $500, which is well below the overall average of $3,000, but that $500 can be very beneficial. Here are three investments to think about:

  1. Credit card debt – Ifyou have any outstanding balances on your credit cards that are not current, meaning that they are accruing interest on the amount due, you should pay these off first. Interest rates are usually very high on revolving credit facilities and there is absolutely no benefit to paying interest!
  2. Textbooks – Put the money aside for books next semester. Textbooks costs continue to increase. Even e-books can be expensive when you multiply the cost by the typical five course load a student carries. Earmark your refund to cover a few books!
  3. Professional Clothing –  Buy yourself a professional, well-fitting suit! You never know when the opportunity will arise to make your “best” first impression.  A good suit tells them you are serious and know how to put yourself together for the task at hand. If you already have the suit, invest in a good pair of shoes.

After you’ve considered these options, saving the money for future expenses or investment is a good bet. Remember, tax refund money is a bonus – don’t blow it on electronics or frivolous items.  This a great start to developing future discipline that will set you up for future success.

Maryann Monforte