How to wisely spend your tax refund money.
When that long-anticipated tax refund hits your account, it can feel like a mini financial windfall. Whether you're receiving a few hundred dollars or a sizeable check, this money has the potential to make a meaningful difference in your life. But deciding exactly what to do with your tax refund can have a lasting impact on both your finances and your future.
Here are some thoughtful ways to use your tax refund money and make every dollar count.
Build (or boost) your emergency fund
Life is unpredictable, and unexpected expenses, like car repairs, medical bills, or home fixes, can come out of nowhere. An emergency fund acts as your financial safety net. If you’re still building or haven’t started an emergency fund, consider putting at least part of your tax refund toward this essential cushion.
Pay down your debt
When deciding what to do with your income tax refund, consider using it towards paying off some of your debt! Whether it’s credit card debt, student loans, or a lingering personal loan, using your refund to reduce debt can improve both your financial standing and your stress levels.
Not sure which debt to payoff first? Check out this blog article where we’ll help you make a plan with two common payoff strategies.
Save for the future
Do you have a big financial goal in mind? Whether it’s a down payment for a first home, a dream vacation, or getting a head start on retirement, your tax refund can make that goal feel more achievable.
With the help of our Goal Builder tool, you can designate categorized savings goals in one of your savings, checking, or money market accounts. Watching the balance grow will surely keep you motivated to reach your money milestone!
Give back to your community
Here’s one of the most unique ways to use your tax refund money! There’s certainly an unrivaled joy that comes from helping others. A portion of your refund can be donated to causes and organizations that are close to your heart.
Charitable contributions don’t just make a difference in your community; in many cases, they’re also tax-deductible. It’s a win-win that lets you spread kindness while potentially reducing your tax burden for next year.
Treat yourself, wisely
Sometimes, it’s okay to splurge — within reason. Set aside a percentage of your refund (say 10-20%) for a treat, while using the rest for your larger financial goals. This way, you’re treating yourself and being responsible at the same time.
Now you have a few ideas on what to do with your income tax refund! This money is more than just extra cash — it’s an opportunity to move closer to your financial goals and create positive change in your life. From focusing on saving, investing, or tackling debt, there’s no wrong choice as long as it aligns with your priorities.