NEW YORK (AP) -- Ask most people what they're going to do with their federal tax rebate checks, and they'll talk about spending -- for back-to-school supplies, a new DVD player, a late summer vacation.
But consumer experts say your rebate could be worth a lot more in the long run if you put it into savings.
Under the Bush administration tax reform package, single taxpayers will get checks of up to $300. Couples will get up to $600, and single parents up to $500.
''People say, 'Oh, it isn't a lot of money,' and they spend it,'' said Ginita Wall, a financial planner from San Diego, Calif., who is on the board of the GE Center for Financial Learning. ''But take a look at what happens if you use that rebate check to jump-start a savings program.''
Here's her math: If you put your $300 rebate into a tax-deferred retirement account that earns 10 percent a year (for example, a stock index mutual fund), your money will grow to more than $5,200 over the next 30 years. Now kick in just $50 a month, and your account will be worth nearly $110,000 when you're ready to think about retirement.
''What I think this rebate could do for you is get you on the right road to saving,'' Wall said.
One of the goals of the government's tax rebate program is to put more money in consumers' hands to help stimulate the economy. Americans are expected to spend at least half the $38 billion they'll be collecting in rebates -- but a chunk of the rest likely will end up as savings.
Colleen DesRuisseaux, a 31-year-old high school guidance counselor from Bow, N.H., and her husband Steve have a special savings account in which they're trying to accumulate the down payment on a house. That's where their rebate check will go, she said.
''I learned about saving from my grandfather and my mother,'' DesRuisseaux said. ''They believed that you don't buy anything unless you have the money in the bank. That's what we do, except for big purchases like a car or a house.''
Don Blandin, president of the American Savings Education Council in Washington, D.C., is perturbed that a lot of people ''seem to be viewing their rebate check as if it's Monopoly money -- let's go buy Park Place.''
Americans, he said, should recognize that they do have choices, and one of them is to save -- for their retirement, for their children's education, for emergencies.
''A lot of people have no savings at all, and that means they have no cushion if anything goes wrong,'' Blandin said. ''That tax refund could be the start of an emergency fund for unanticipated expenses like a medical emergency or the repair of a car you need for work.''
If savings is your goal, there are a lot of places to do it.
Blandin noted that credit unions generally pay higher interest on accounts than banks ''and tend to be friendly to their members.'' They often provide educational materials and free help with retirement planning, he added.
Internet banks also offer good rates, usually higher than most traditional banks.
Wall recommends that families consider setting up Roth IRAs, which are individual retirement accounts. Unlike traditional IRAs, Roth IRAs are funded with after-tax dollars. But earnings grow tax-free, and there are no taxes due when the money is withdrawn for retirement.
She also believes savers should take another look at creating Educational IRAs for their children and grandchildren. Under existing law, parents and grandparents can contribute $500 a year to these accounts. But starting next year under the new tax law, the contribution limit will rise to $2,000, ''making it a lot more attractive for savers,'' Wall said.
Both Wall and Blandin say that if families feel strongly about spending their rebate check, they should do it in a way that pays benefits.
Wall suggests: ''It's a wonderful opportunity for the entire family to sit down and powwow about what money means, how it could be spent. I can be a way to help instill financial values.''
Blandin's idea: ''How about dividing it in thirds? Take $100 and buy something, put $100 in a savings account and maybe give the last $100 to charity or a good cause.''
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