How to Use Your Refund
While we understand that many families use their tax refund to pay existing bills and pay down debt, investing in savings and your future can be extremely helpful in achieving financial security. Here are a few ideas on how to achieve financial success.
Open a Bank Account - Bank On California
Bank On California is a voluntary collaborative initiative of banks committed to offering unbanked households access to mainstream financial products and services, including low-cost checking and savings accounts and access to free financial education opportunities. Banking accounts are also crucial for savings and building a credit history that will help you enter the financial mainstream and achieve your financial goals. Click here to learn how to start account and for help in managing your finances.
Buy a Savings Bond
For as little as $50, you can buy a U.S. Savings Bond and start saving for your family’s future.
- Savings bonds can help you by setting aside money for emergencies, or to get closer to your goal to buy a home, pay for education or save for retirement
- You can buy bonds in someone else’s name to give as gifts and help your loved ones reach their dreams
- To buy a savings bond, check the box on the paper or online tax form and indicate the amount of the savings bond(s) you want to buy. If you are filing a paper return, use IRS Form 8888.
- Watch your mailbox: You will get your savings bonds in the mail 3 to 5 weeks after you receive your tax refund. Learn more about buying savings bonds with your tax refund.
ScholarShare (California’s 529 College Savings Plan)
With the rising costs of higher education, it is never to late to start saving in your children’s educational future. For as little as $25, you can begin to invest in your children’s college education thanks to ScholarShare, California’s 529 College Savings Plan. Click here to learn more.
Save for Retirement
If possible, it is always a good idea to set aside some savings for retirement. Retirement savings are favored by tax policy — you are not taxed on your contributions to your retirement for most plan types, which means you can put aside more than the amount your take-home pay will be reduced, and they can grow and compound free of taxes until you withdraw them.
Options include setting up your own Individual Retirement Account (IRA), participating in a retirement plan sponsored by your employer (a 401K or 403B) plan, or participating in a government-backed plan. (If you have access to a retirement plan sponsored by your employer, they may match a portion of your contribution, so be sure to look into that). specifically designed. For people who don't have a retirement savings plan through their work, or lack other options for saving, the federal government has launched a no-fee myRA program.
California is also developing a new Secure Choice program that will offer retirement savings options for employees of eligible employers who do not offer retirement plans. Secure Choice is a voluntary, portable retirement savings plan for employees in the private sector that would encourage participation through automatic enrollment (with opt-out) and payroll deductions. Click here to learn more.