Broker Check

Monday Money Report

| April 24, 2023

Last week the markets were essentially flat as investors weighed corporate earnings reports amid fears of an upcoming recession. We also had the tax filing deadline on Tuesday.

Hopefully your taxes have been filed and the question is now either how do I pay this bill, or what do I do with this refund? If you owe, you do have the option of establishing a payment plan with the IRS. Going forward, speak with your tax preparer about adjusting your withholding so that you’re not hit with a large bill or failure to pay penalty for not withholding enough during the year.

If you’re receiving a refund, it’s time to consider how you can best use that money.  If you have credit card debt, paying that down should be your first priority.  Many cards have an interest rate well over 15%, so paying even a portion of the debt provides immediate savings, and allows more of each subsequent payment to go towards principal.  If you have multiple cards, the avalanche method says to pay off the card with the highest interest rate first.  The snowball method would say to pay off the smallest debt first.  Both methods have their advantages, so however it works best for you, you are still making progress towards being debt free.

If you don’t have any credit card debt, the next step is adding to your emergency savings. Ideally, you should have enough money saved to cover six months of living expenses. Last week we discussed options for your savings.  Assuming you’ve decided on a high-yield savings account or money market, just deposit your refund directly there.

Once you have your savings built up, consider necessary expenses.  If you don’t have a will, consider using the refund to have one drafted, along with your Power of Attorney and Medical Directive.  Other necessary expenses could be tuition, needed vehicle repairs, or overdue home maintenance.  If you’re in good shape there, look at your retirement savings. Have you funded an IRA, your HSA, or just a taxable investment account? This may also be a nice addition to your children’s college savings accounts.

Another option for investing this money is to invest in yourself.  Is there additional training, a certification, or degree that would improve your marketability and salary range? Using your refund here could multiply that investment many times over.

Finally, if you’re in a great place with all of this, one of the three ways money makes you happy is giving it away.  There are multiple wonderful non-profits in our community.  Pick one that speaks to you and make a difference with your refund.  You’ll also have the added benefit of reducing your 2023 taxes!

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Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. 

The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, contact the appropriate qualified professional prior to making a decision.