According to the IRS, the average tax refund for 2011 is $2,985. How will you spend it? You can buy a ticket to Vegas and blow it on the tables, buy a pair of Louboutins, or you can take a more mindful approach. Here are some great investment tips from Louis Barajas, personal finance expert and author of My Street Money.
Invest in a Roth IRA
Most Latinos don’t have a retirement plan. Start your own Roth IRA through a credit union or bank. That money grows tax-free, and when you retire and pull the money out, none of it is taxable. It’s also great for young people. You can put up to $5,000 a year.
Pay off your credit cards
Pay off the ones with the highest interest rate first. If you have a $2,000 refund and you owe $2,000 on a credit card that charges 19 percent and pay it off, you basically made 19 percent on your money. If you stick it in a savings account, it’s earning less than one percent.
Invest in yourself
The economy is tough and so are jobs. Do a self-evaluation on how you can invest in yourself to upgrade your skills. You may need to take computer class. Ask yourself, “What can I do to invest in myself and become more valuable at work?" For some, this may mean investing in a new wardrobe, which can boost your self-confidence.
Do some personal maintenance
There are a lot of Latinas that may have health insurance at their job but aren’t earning a lot of money, so they sometimes avoid going to the dentist or going to the eye doctor. Most jobs don’t offer optometry or dental insurance. Take a look at what you left on the back burner. You can also take care of yourself by joining a gym and getting a handle on your stress.
Start your own small business
In this day and age, $2,000 gets you internet service, a computer and a scanner. Anyone can start a business from home. As soon as you collect your first dollar, you’re officially in business!
Happy (and smart) spending!