Use Your Tax Refund Wisely

With tax season drawing to a close, many of us are starting to wonder what we’ll do with our tax refunds. Don’t let your refund slip by! Use the tips below to decide how you’re going to spend your refund today, so that you’ll be ready when the time comes.

Pay down debt

If you’re working to pay down debt with a Monthly Envelope in Goodbudget, your tax refund is a great opportunity to get ahead. Allocate what you can now to pay down your debt, and you’ll save each month with lower payments. The average credit card charges ~15% interest. Investing $500 now to pay down your debt can save you over $1,000 over 5 years.

Save towards a goal

Saving towards a long-term goal? Use your refund to catch up or get ahead on your savings plan. If you don’t have a long-term savings goal, start one! Don’t be “surprised” the next time the holidays come around, or your quarterly insurance payment comes due.  Set goals in Goodbudget to budget for these large, but predictable expenses.

Be generous

Be generous with your money to experience joy and disarm fears of not having enough. If you already make donations to a charity, that’s great! But feel free to be creative in how you give. You can take a young person out to lunch, or express gratitude to your child’s favorite teacher by treating them to dinner. Have fun with your generosity!

Originally posted on 4/9/2012.
Last updated on 4/11/2018.

7 Comments

  1. We have a rule in our house when we get our tax return. Always a bit of fun money. Whatever after the last whole $100. So if our family return is $1872.93, $1800 goes to debt or home improvements (always something on the go!) and $72.93 is fun money. This year we used the overage towards a sodastream. Budgeting doesn’t always have to be about rules and “shoulds” – it’s important to take a little breather when the extra funds come in.

    • Hi Grace – Thanks for sharing. I love your system of using a bit of overage for fun! I couldn’t agree more that making space for a breather is important.

  2. Filed in January and received in February. Replaced computer and broken riding mower, and saved for furniture.

    • Nice! Can I also add how impressed I am that you filed in January??

  3. Thanks for the tip; this is always a bit of a challenge with some many ways to use that refund. I appreciate mentioning the generosity side–I always look for somewhere to use it to “help young things grow” (thank you, Hello, Dolly!)…kids raising money for summer service trips, graduation gifts, special projects. Something that my usual giving doesn’t stretch to. I enjoy watching for something coming up and then surprising someone with the gift.

    • I love hearing how you deliberately make space for gifts! I’m inspired to step up my gift giving budget 😀

  4. Thanks for the tips however , I rely entirely on my Tax Consultant and Financial Planner / Advisor to keep me legal and financial freedom

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