We are in the middle of tax refund season and for many of us, this provides an opportunity to catch up on goals, catch up on bills, or to do something a little special for us or our children.

But where to get started and how do you decide what to work on?

In this post, I’m going to share 10 Smart and Quick Ways to Spend Your Tax Refund Wisely. These tips will help you have more peace and move you closer to your goals.

If you receive a refund, think about how you will allocate your refund before you receive it.  This is so important because it is easier to decide and commit ahead of time to use your tax refund in a way that helps you achieve your financial goals.  If you wait until it is in your account, then there is so much temptation to spend the money on impulse purchases that bring more immediate gratification and don’t necessarily bring you closer to achieving your financial goals.

However, before you even decide which of the 10 ways to use your tax refund, I think it is important to take a step back to ask yourself 3 questions.  These will help you to determine your priorities, where to focus, and how much money can go to a particular goal(s).

Guiding Question #1: Am I current on my bills?

If you are not current on your bills then start here first. Also, if you expect to have challenges paying next month’s bills, then use your tax refund to either pay past due or upcoming bills. I talk about this more in Strategy #1.

Guiding Question #2: Is there something on the horizon that I need to pay for?  

Knowing your schedule, calendar, and upcoming commitments is huge.  This will help you to properly plan for things on the horizon, avoid being surprised, or put money aside for a goal only to have to remove it and potentially pay fees.

For example, summer is coming up. Do you need to pay for camp? Or with the end of the school year approaching do you have costs related to prom, graduation, school trips, etc.? In this example, knowing this will help to guide your decision about whether you need to put some of the money aside for camp or school activities and if there is money left over, then use the remainder to accomplish a financial goal.

Guiding Question #3: What is my number 1 goal?

If you are current on your bills and understand what is coming up and have a plan to pay for it, then now you can think about the most important financial goal that you want to accomplish.  Since it is the most important, allocate the money to contribute towards that financial goal if you are first able to pay your bills.  If you haven’t set your financial goals yet, then now is a great time to set them.  Then once you know your goals you will know where to allocate the refund.

Now that we have discussed the 3 guiding principles, let us review the 10 ways to use your tax refund that will bring you more peace and move you closer to your goals.

Strategy #1. Catch up on bills.

I cannot emphasize this one enough. Being current on bills provides so much peace of mind. Think of it this way. Have you ever missed a payment and had a bill collector call?  I have. That sinking feeling in my stomach really stole my peace and caused so much stress. In those moments I wished I was current on my bills and didn’t have to deal with the stress of having to hurry up and get the money together to avoid a shut-off notice or negative hit to my credit report.

However, despite our best intentions, sometimes things happen. Between unplanned expenses, medical expenses, and extra activities for the kids sometimes you may fall behind on bills. Therefore, if you are not current, please pay your bills first. Being current on your bills helps reduce financial risk, provide more stability, and reduces financial stress.

Also, if you are current on your bills, consider getting ahead of bills that are causing you stress.  For example, if things like childcare costs or school tuition are stressing you every month, then take some of the tax refund and pay these expenses ahead of time to give yourself a little breathing room during the month.

Strategy #2: Pay off debt.

Reducing or eliminating your credit card balance will save you money on future interest payments and also help improve your credit score. It is also motivating to see your balances shrink, which will inspire you to keep going towards achieving your financial goals. If you don’t have credit cards, then think of other debt that you may be able to reduce with a lump sum payment.  This could include:

  • Medical debt
  • Student Loans
  • Personal loans
  • Car Loans
  • Mortgages

Proverbs 22:7 (NIV) says, “The rich rule over the poor, and the borrower is a slave to the lender.”  When we are in debt, we are a slave to our past purchases and spending decisions.  I know at times, I’ve felt trapped and stuck in the past because of my debt.  However, paying off debt will allow you to stop using your current income to pay for previous expenses and also reduce interest payments or fees that are commonly added onto debt.

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Strategy #3. Boost your savings.

Developing a savings cushion is crucial.  An emergency savings account helps to cover you during tough economic times or when the unexpected, expensive things pop up.  Aim for about 6 – 9 months of expenses in an emergency savings account.

I understand that 6 – 9 months of expenses is higher than the 3-6 months of expenses many financial advisors suggest.  However, I recommend this amount because of the financial shock that an unexpected job loss or emergency can have on a one-income household.  Having the extra cash will help keep the bills paid if replacing the income takes a little longer than expected. Plus, it’ll give you peace of mind knowing that you have something in the bank to cover the unexpected.

Strategy #4: Invest

Often people want to invest, but one of the biggest investment mistakes that women make is they believe that they don’t have the money.  Using your tax refund gives you extra income that can be used to invest.  

According to Ellevest, “Because every single day you wait could cost Future You about $100. That’s like having $4 deducted from your bank account every single hour of every single day. Or taking a pay cut of more than $17 an hour. Or giving up about $3,000 in income every month.”  Delay is costly so start investing as soon as possible.

Strategy #5. Contribute towards a vacation.

A vacation is on many of our goal lists, vision boards, and list of dreams.  However, one of the things that holds us back from vacationing more is time and money.  What if you could use part of your tax refund to go on a debt-free vacation? What if you could use that refund to pay for the vacation before you leave and not have to worry about it after you get back?  That would be amazing, right?

Therefore, consider using that tax refund to go on a girl’s trip or family vacation.  However, please don’t go on vacation at the expense of accomplishing other financial goals.  Also, if you want to learn how I go on amazing, luxury vacations for less then click this link to learn more.

Strategy #6: Contribute towards the purchase of a home.

There are numerous benefits to owning a home, some of which include feeling like you have something special for you and your children, tax incentives, and the accumulation of equity. In the podcast episode, “The Single Mom’s Guide To Buying A Home” we discuss the benefits of homeownership, the home buying process, and the programs that exist to make home-buying more affordable.

If you are considering buying a home, then you can use your tax refund to contribute towards your goal of homeownership by saving for your down payment. Also, if you decide to open an account with Ellevest, you can use their goal-based account for homeownership which is available in the Executive membership.

Strategy #7: Contribute to your retirement.

If you aren’t already maxing out your yearly retirement contribution, this is a good time to make a contribution without feeling the pinch in your monthly budget. If you are looking at starting your retirement account, then consider your 401k or 403b at your job or Ellevest’s retirement accounts (available in the Plus or Executive membership). Your future, retired self will thank you.

Strategy #8:  Contribute to your child’s college savings fund.

According to US News, “The average cost of tuition and fees for the 2018–2019 school year was $35,676 at private colleges, $9,716 for state residents at public colleges and $21,629 for out-of-state students at state schools, according to data reported to U.S. News in an annual survey.”  Your tax refund can be used to fund part of your child’s college savings account. Conversely, if your child is enrolled in a private grade school, you can use funds to pay for school.

Click here to create your free Investment Plan from Ellevest

Strategy #9:  Do something for you.

It’s imperative that you maintain balance in your life.  You do not have to allocate 100% of your tax refund to shore up your finances or even spend 100% on your children.  The amount that you can spend on yourself depends on your current financial situation including outstanding bills, debt, and planned expenses. However, it is important to do something just for you even if it is just getting a 90-minute massage that you purchased on sale from Groupon.  

Strategy #10: Give.

The Bible commands us to give, and it is truly amazing to give. One of the things that I love to do is to engage in service to the community. I truly believe that engaging in service is critical to living a full and complete life. Acts 20:35 tells us, “In everything I did, I showed you that by this kind of hard work we must help the weak, remembering the word the Lord Jesus himself said: ‘It is more blessed to give than to receive.’” I love this passage because it demonstrates the importance of giving.

The benefits of service to your soul are amazing, but when you serve others you also open yourself up to receive blessings. If you close your fist to hold onto everything that you have, then you also aren’t opening it up to receive anything new. Giving and service don’t always mean money. Although money is important, you can give your time, treasures, and talents.


We just covered 10 ways to use your tax refund and the 3 guiding principles to determine which of the 10 strategies will best help you and your family have more peace in your finances.  Now that you understand these things, it is so important to create your plan for how to use your refund before it is in your account.

The best way is to review what you expect to get for your refund. If you have already filed your taxes then you know how much you will receive and you can plan based on that number. However, if you haven’t filed taxes yet, then if your refunds tend to be pretty consistent, then plan based on last year’s number and then review once your taxes are complete.  I say this because there were changes to tax law in 2018 which could impact your refund amount. Regardless, I encourage you to review your tax withholdings to determine if you are maximizing your paycheck.

Remember, there is no one size fits all for spending your tax refund. The important thing is that you plan in advance for how you will use it. Contribute to your financial priorities, but don’t forget yourself in the process.

About Aisha

Aisha Taylor of FNPhenomenal

Aisha Taylor is a single mom of twins, personal financial coach, work from home entrepreneur, and #1 Amazon Best Selling Author of the book “5+5 FNPhenomenal Ways to Save $100 This Week Without Killing Your Lifestyle.” Aisha has been featured in ESSENCE, Jet Magazine, and Black Enterprise. She is also the Founder of FNPhenomenal (Frugal –n- Phenomenal), a movement designed to help single moms create a vision for their lives, craft a financial strategy to support that vision, and show them that phenomenal living is possible. It’s time for you to be Financially Phenomenal!


Instagram/Twitter/Pinterest: @FNPhenomenal

I’m excited to work with Ellevest to start this conversation about women and money. I may receive compensation if you become an Ellevest client.