The earlier you begin saving and investing, the less money you will need to invest to meet your financial objectives. The power of compounding allows you to earn interest on both the money you save and the interest it earns. Even if you only put a small portion of your tax refund money into savings right now, you can watch your money grow over time.

Here are useful ways to consider while saving and investing, outlined by Los Angeles financial advisor, Samuel Rad. He is a well-known personality in LA as a celebrity financial advisor.

Tax savings

According to the US Treasury, approximately three-fourths of taxpayers have their taxes too much/overwith-held, culminating in tax refunds.

You can reduce the amount of money you owe on your federal taxes by claiming the Child Tax Credit (CTC). If you have qualifying children at home, the CTC is determined by your household income, if both partners pay their taxes jointly.

The CTC was expanded under the American Rescue Plan of 2021 due to the COVID-19 pandemic.

Tax breaks can help with a wide range of education-related expenses. Tuition for college, elementary, and secondary school is included in these costs.

If you are philanthropic, you will be surprised how donations can help you save on on your federal taxes. You can easily claim a tax deduction if you are associated with 501(c)3 organisations.

 To deduct donations, include a Schedule A with your tax return. You can claim vehicle or cash donations with proper documentation.

Clearing High-interest debt

Got a tax refund! Apart from taking a short vacation, you can consider investing your tax return. However, there is an important thing to consider before even starting to invest if you are struggling with high-interest debt.

For example, If you do not pay off your balance in full each month, most credit cards charge high-interest rates of up to 18% or more. No investment will provide you with guaranteed returns that will outweigh the high-interest rates you typically pay on credit cards and other high-interest debt.

Emergency Fund

Having an emergency fund is imperative. Saving three to six months of living expenses in an emergency fund, if possible, will provide you with peace of mind when life throws unexpected financial emergencies your way.

Whether it's a medical emergency or other unanticipated repairs or expenses, having an emergency fund can help you minimize their impact on your future financial plans. 

According to the Los Angeles financial advisor, planning for your financial future is time and money well spent.

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