During tax season, many clients and friends comment on their impending income tax refund. Everyone seems to have plans for what they view as this newly discovered burst of wealth. The list includes paying off credit card debt, buying something extravagant or, possibly, placing some or all of it into savings.

However, a tax refund is not newly discovered wealth.  It is your money being returned to you after the federal and/or state government has had full use of it for perhaps more than a year. Unlike a bank or other financial institution, this loan was interest-free, so you - the lender - received nothing in return.

A more efficient wealth-building strategy is to learn whether your withholding can be adjusted so that you do not receive a tax refund next year.  Having this amount directly deposited into a separate savings account will provide you with money you may need for tax payments, and you may end up with a windfall to spend or save as you choose next year.  Consider placing this year's refund in a CD for some future expenditure.  

To further discuss this strategy or similar money management strategies, make an appointment with Diane Nissen Friedman by phone (201)447-1137 or email.

Certificate of Deposit can be safe, reliable place for money designated for future expenditures.  CDs can be purchase locally or from any financial institution throughout the United States.  Purchaser should buy only federally insured CDs.

CDs generally have better interest rates than savings accounts. Purchasers may lose interest by cashing them in early.

Contact, Diane Nissen Friedman, to found out how CDs may be useful for your personal budget.

Read more about CDs at Investopedia.