32 LONGISLANDPRESS.COM • APRIL 2018
USING YOUR TAX REFUND WISELY
By MICHELLE
GABRIELLE CENTAMORE
Looking forward to a big refund
check from your tax return?
Don’t be so quick to spend it, says
David Schwartz, CFP, CEO of FCE
Group, a wealth management,
investment advisory and financial
planning firm in Lake Success.
While it may seem like an easy and
justifiable round-trip ticket for your
dream vacation, your refund is
truly an opportunity to secure your
finances.
So, spend — and most importantly,
save and invest — wisely.
GOT DEBT?
If you have any type of high-interest
debt, clear it, or pay as much off as
you can.
“There is no good debt,” says
Schwartz.
Start with the credit card that is
the most costly or has the highest
interest rate and then work your
way down from there.
If you have no debt, then apply the
“spend 1/3, save 1/3, invest 1/3” rule.
SPEND ONE-THIRD
Spend on something that creates
worth, suggests Schwartz.
Remodeling a kitchen can add value
to your home if you’re looking to
sell down the line. Fix your car so it
doesn’t break down.
“If you are going to spend your
refund, spend it on something that
has value instead of running to stores
and buying stuff,” says Schwartz.
Desperate for a getaway?
“Your family vacation does not need
to involve a plane ticket or boat or
something lavish,” says Schwartz.
It could be a simple day trip to
Montauk.
SAVE ONE-THIRD
If you’re going to save, consider a
money market fund. Visit a local
bank or discount brokerage firm
and seek a high yield.
“It’s just like a high-interest savings
account and you can withdraw
funds at any time,” notes Schwartz.
That saved money can be a safeguard
if your job is in jeopardy or if you’re
looking to make a dramatic or risky
career move. Plan ahead for your
kids’ college tuition with a 529 plan.
“You can save New York State
tax, which is a good thing,” says
Schwartz, however, that money
could affect whether or not you
qualify for financial aid.
INVEST ONE-THIRD
Establish an individual retirement
account (IRA) or contribute to an
existing one and you’ll be setting
yourself up for a healthier, more
financially stable retirement, says
Schwartz.
You don’t need a minimum to open it
and whatever it earns, you won’t pay
taxes on the interest until you start
taking retirement distributions. You
should also see if you qualify for a Roth
IRA: Although the contributions are
not deductible, the retirement account
grows tax-free and there is no tax to be
paid when the distributions begin.
“If you have extra money and you
put it away,” says Schwartz, “it
compounds and it grows and it
makes life so much more enjoyable
down the road.”
PERSONAL FINANCE
WELLNESS PLAN:
PERSONAL FINANCE HEALTH
It’s but a lucky few that haven’t
found themselves behind in their
bills and struggling to get out of
a financial hole at some point in
their lives — some more so than
others.
Since it is only a matter of when, not
if, financial hardships — natural
disasters, divorce, joss loss, to name
a few — will occur, the best course
of action is to plan ahead with a
rainy-day fund and these tips from
financial experts:
Make a Financial Calendar: Key to
balancing your budget is tracking when
income comes in and when bills are due.
Check Your Interest Rate: APR
too high? Research lenders that
offer lower rates. And switch to a
credit union with a higher yield on
checking accounts.
Track Your Net Worth: Checking
your credit score isn’t the only thing
that matters when it comes time for
a big-ticket purchase.
Set a Budget: And if more money
is going out than coming in, take
corrective action immediately.
Try an All-Cash Diet: Think of the
savings at the gas pump alone!
Take a Daily Money Minute: The
budget isn’t going to track itself.
Allocate 20 percent of Income to
Financial Priorities: Like paying
down debt, for one.
Budget About 30 percent to
Lifestyle Spending: Because once
you have a budget, you’ll know
exactly how much guilt-free fun you
can afford.