By Mark U. McGahee

Are you getting a tax refund? What will you do with that money? Here are some suggestions.

• Emergency fund: Either start one or add to one. It should be equal to three to six months worth of expenses.
• Education or training: Always a good idea, because you can increase your potential for career advancement by investing in yourself.
• Down payment: Whether it is for real estate or a vehicle, a sizable down payment lowers the principal of your loan requirement. Real estate would be the preferred option, but your vehicle may have reached the end of its serviceable life.
• Contribute to your retirement: Open an IRA, or add to the one you have. If you have already maxed out your IRA this year, consider a tax-deferred annuity.
• Roth IRA for your child: Do you have a child who will earn income this year? If your child is under 18, he or she can open a Roth IRA. Contributions can be as much as $5,500. Contributions cannot exceed the dollar amount earned by the child in 2014. You may decide to fund your child’s IRA yourself.
• Become a member of a warehouse club: If your family consumes household items in large quantities, or if you own a small business, warehouse discounts can save you a lot of money.
• Apply to debt: It may be difficult to find a better option.
• Hire a financial planner: Look for a credentialed adviser. Many of them work on a fee-only basis. Your tax refund may cover most or all of the fee. The planner will review your present financial circumstances and help develop a plan for the future.
• Pre-pay your vacation: Have you ever returned from your vacation feeling a sense of dread, because you ran up major charges on your credit card? Don’t do that this year. Pre-pay some of the costs, such as lodging and/or airfare.
• Home improvement: Whether it is energy-efficient windows doors or appliances, updating energy-wasting items can save you money.
• Estate plan: If you don’t have a will or living trust, or if it has been years since they were drafted, and you have had life-changing events (like additions to the family, death of a family member or divorce), it is time to get this done.
• Get a pay hike: Reduce your withholding, then save or invest at least half of the increase.
• Increase your life insurance: Take advantage of lower rates for term life insurance and protect your family or your business.
• Give it to charity: Maybe your church has a building project or supports missionaries. The Salvation Army is always in need of additional funds. Suffolk has many worthy charitable organizations that need funds and who would happily accept your gift.

The average federal tax refund in 2012 was $2,803. That’s not peanuts, but it can slip through your fingers before you know it’s gone. Why not plan to use it to enhance your life or the lives of those you care about?

Mark U. McGahee of Nansemond River Financial Services is a financial planner specializing in investment and protection planning. Email him at mmcgahee@isgva.com.