8 Wise Ways To Spend Your Tax Refund

Are you one of the millions getting a tax refund this year?  Maybe you’ve already got it but haven’t spent it yet.  Your tax refund can be a great way to reach some financial goals.  Here are eight ways that you can spend your tax refund that are sure to make your life easier.

Repair Or Fix Up Something

If you’ve got something that’s broken or on it’s last legs, now’s the time to consider fixing it.  Whether it’s a leaky water heater, a dented bumper, or a room that needs re-painting, your tax refund can help.  In many cases, fixing or replacing something before it fails altogether will save over an emergency repair.

Set Up An Emergency Fund

Speaking of emergencies, now is a great time to put money aside in case one comes up.  An emergency fund is always a great idea.  Every household should have at least $1,000 set aside for this purpose.  If you don’t, why not use some of your tax refund money to get this going?

Pay Down Debt

Why not knock off a chunk of debt?  Paying down debt is always going to increase your net worth, so definitely give it some consideration.  Maybe you have one or two bills that could be wiped out with your tax refund.  Getting rid of a payment or two is a big weight off your shoulders.

‘Pay’ A Bill That Isn’t Due Yet

If you’ve got a bill coming sometime over the next year that you might otherwise struggle, use your tax refund to help.  You don’t have to pay the bill in advance, but put the money aside so that it’s there when you need to pay it.  Good examples of this are spending on Christmas gifts or extra money to cover the air conditioning bills for the upcoming summer.

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Are you ready to plan that great vacation you’ve been thinking about?  Do you really need a better set of wheels sometime in the next couple of years?  Your tax refund can help with these or similar things.  You may not get it fully funded, but setting a chunk of money toward a big goal can go a long way to making it happen.

Stash It Away For Retirement

Most people don’t have enough saved up for retirement.  If you fall into this category, consider sticking your tax refund in a Roth IRA or other retirement account.  A little now could go a long way later to living comfortably in your golden years.

Treat Yourself

Sometimes we all need to let loose and spend.  If you’ve got a good chunk of money, now’s the time to let loose and buy something you normally wouldn’t.  Here’s the kicker though, don’t use any more than 10% of your tax refund on this.

Split It Up

If you have more than one idea that strikes your fancy, whether it’s from this list or your own ideas, split the money between them.  There’s nothing wrong with tackling a few different goals at once.  Personally, our refund covers a variety of things like money toward vacations, car payments, car repairs, kids activities, and stuff around the house.   Do what works for you!

Readers, did you get a refund this year?  If so, how did you allocate it?  Please share with me and other readers in the comments below.  Thanks for reading!

11 thoughts on “8 Wise Ways To Spend Your Tax Refund”

  1. I’d suggest a bonus “tip” – People who got a big refund this year should consider adjusting their withholdings. Keep more of that money in their pocket each paycheck instead of giving the government an interest free loan!

    • I’m halfway with you on this one. I used to be more on board with this but now that savings accounts pay so little, I don’t find this as much of a concern. I know there are other areas that you can put your money to earn some interest, but overall, the cost of ‘loaning’ the money to the government is pretty minimal these days. Plus, for many people even earning 0% leaves them further ahead than if they put it in something that earns nominal interest, simply because many will spend some of it along the way.

      Thanks for commenting!

  2. These are all good things to do with your refund. Paying down debt should always be a priority and then savings.

    You are right savings accounts are kind of worthless unless you use one of an emergency fund, but there are other types of investments out there that might make sense to stash the cash in.

  3. All good ideas. We plan on buying dividend paying stocks with our refund. We hold no debt and already have an emergency fund so we’ll just put that money back to work earning us that growing passive income stream. Nice tips!

  4. We always set aside$1k for mortgage principle reduction and then the rest depends on our goals for the year. This year it just went to savings to prepare for baby 2!

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