3 Great Ways to Spend Your Tax Refund

If you are one of the people getting a tax refund this year, consider yourself very lucky. You probably have visions of spending and more spending of your windfall. Here are 3 great ways to spend your tax refund this year, plus three more for good measure!

Before you go all crazy, it’s a good idea to really consider your actions before you act. While you may get a temporary high from spending, the hangover effect might not be so pretty. By using your funds in one of these ways, you are setting yourself up for a more comfortable life and retirement.


3 great and enriching ways to spend your tax refund
Itching to spend all that money? Not so fast my lovely!

3 Great Ways to Spend Your Tax Refund:


  • Replenish your reserve. This is a great time to boost your emergency fund back to where it was. Conventional wisdom says you should have savings equal to at least 2 months of living expenses to cover your needs in case of emergency, like job loss or healthcare costs.

I’ve seen recommendations of up to 6 months of reserve, but that might be unattainable for most people. If you don’t already have one, now is a great time to start one. If you’ve used some of the money, it is also a great time to replace used funds. The peace of mind that this brings is immense. Having a good overall picture of your financial wealth is essential.


  • Pay off debt. This is a no-brainer. If you are sinking in bills and can relieve some of the burden, then you definitely should do that rather than blowing all the dough on some useless stuff. You could use the funds to reduce or eliminate credit card bills.

Perhaps you have upcoming bills such as home/car insurance. You could opt to pay it as one bulk payment rather than spread it out over months. This frees up more money at the end of the month. Best part, you don’t have to worry about that particular bill for another year!

prada bag in wine color
Maybe don’t go this crazy, but something that pleases you still.



  • Live a little. This is an unexpected one isn’t it? Just like all work and no play makes Jack a dull boy, all full on adult “responsibility” makes for a restless and ultimately unhappy person. Sometimes, in our quest for frugality, we forget to pamper ourselves.

Don’t deny yourself. Use some of that money to do something for you. A budget vacation doesn’t have to be super expensive. Watch out for vacation deals. Lots of deals can be had when you know where to look.

Try sights like airfare watchdog, my favorite Skyscanner or marvelous Secret Flying for great deals that won’t break the bank. Treating yourself every once in a while doesn’t make you a bad person. In fact, it might just be the prescription for much needed motivation to save anew. Any money leftover can be put towards the first two.

These are just 3 great ways to spend your tax refund. There are of course other things you can do with the money. A few bonus ideas to get you started.

  • Add to your retirement fund. This might entail opening a Roth IRA for instance or a brokerage account with bonds and stocks that have the potential of increasing over time. It’s never too early to get into the retirement mindset.
  • Start a college fund for your kids. Kids are expensive, so you can’t start saving for them too early. A 529 savings plan is a great tax-advantaged way to save for tuition. Your withdrawals will be free of federal tax as long as you use it for qualified deductions such as tuition, books, and room and board. 
  • Start a business. With the great walk-out that has happened in the past year, thanks to covid, a lot of people have used the opportunity to change their lives, either by starting a new business, or changing careers altogether. Some businesses do’t require a lot of money upfront. Perhaps turn a hobby into a business. Dog walking, pet sitting, etc.

If your refund amount is very high, it might also be a good time to take a look at your deductions. You may want to adjust your W9 so that your take home pay is higher. While getting a big check is awesome, it also means you are essentially giving Uncle Sam an interest free loan for the year. That is not ultimately the smart thing to do.

Hopefully you have enjoyed these 3 great ways to spend your tax refund, along with the bonus suggestions. The important thing to remember is that while preparedness is great, it is also important to treat yourself.

Life is stressful enough, and self-care is important. Without taking time to feed your soul, the level of stress simply increases. A lot of people were fortunate to get the stimulus checks, and plenty of people have put those funds to good use to make their lives better. If she can do it, so can you. 

Have you filed your taxes yet? Or are you like me waiting till the last minute because l am not due a refund? How will you spend your money? Will you do any of these 3 great things with your tax refund money?


24 thoughts on “3 Great Ways to Spend Your Tax Refund”

  1. These are great tips and usually what I resort to with my small refund. This year I decided to just put it in my checking account towards current expenses.

    • Good for you :-). Sometimes you can be on such a high, you spend it before you even get it. I am not a big fan of those “advance” places.

    • Haha! Me too. It’s amazing how many of my friends spend it all before they even get it. Debt is always the last thing on their mind unfortunately. I never stop preaching though :-).

  2. I’m paying off 2 credit cards which will leave me with one credit card to pay off and hopefully I can get it paid off by the end of the year.

    • A great goal. So much better to save for it than go on credit and have money worries after the vacation is long gone :-).

    • Woohoo! I love the fact that a lot of people are using the refund to pay off debt! So proud of you. I like the deep cleaning too, way to jump start the season :-).

    • Nice! No need to deprive yourself of everything. A nice mix like that is best for keeping you on track. All work and no play and all that :-).


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