Ways to spend your income tax refund

Expecting an income tax refund this year? If so, you are in the majority according to the Internal Revenue Service (IRS) over 70 percent of Americans get money back at the end of the tax year, with the average refund being close to $2,000. Here are some money smart ways to put that refund to good use:

1.Create an Emergency Fund.
Unexpected events can sometimes result in major expenses or a loss of income. To deal with such emergencies, it's a good idea to establish an account containing up to three to six months' worth of living expenses.

2.Reduce High-Interest Credit Card Balances.
Reducing high-interest credit-card debt is one of the smartest ways to use your tax refund. It provides an immediate return on your investment. And once you pay off the debt, you can begin to invest the money you were spending on debt payments.

3.Fund Your Retirement Account.
Many working Americans have no money invested for their retirement. If you are one of them, use your refund to start an IRA.

4.Invest in Your Home.
Consider improving on one of your largest investments your home. A remodeling project such as new carpeting, paint, or a kitchen remodel can increase the overall value of your home.

5.Fund Your Child's Education.
A four-year college education comes with the price tag of close to $100,000. Use your refund to start your child's college education savings with a 529 Plan. They work much like a Roth IRA, with withdrawals that are completely tax-free when used for higher education purposes.

6.Invest in Your Yourself.
Investing in your own emotional, physical, or intellectual growth is a great way to use your refund. Whether it's paying for a gym membership or going back to school to earn a higher degree, you'll feel effects of this type of investment quickly.

How are you spending yours?