Tax day, April 15th is here and according to, 54% of people in America will get a tax refund.  Today, I’m going to discuss 5 different ways to use your tax refund.  Before you get your tax refund check, I suggest that that you think about how you will allocate your refund.  I’m expecting a refund and I’ve already committed to doing many of the tips that I am recommending.  It’s easier to decide and commit ahead of time vs. waiting until the money is begging to be spent once it is in your bank account.


Tax refund time is a great time to catch up on your financial goals or do different things that you have put off throughout the year.  These recommendations assume that you are already current on your bills.  If you are not current, please focus on bill payments first, then if you have money left over you can adopt the tips recommended in this article.  Whatever strategy you chose, I would recommend that you combine with Strategy 5 to ensure that you do something a little extra for yourself.

  1. Pay down credit card debt: The average interest rate on a credit card is 15.61% according to  The tax windfall that you will get is a good way to reduce or eliminate your credit card balance, which will save you money on future interest payments and also help to improve your credit score.
  2. Enhance your savings: Developing a savings cushion is crucial.  An emergency savings account helps to cover you during tough economic times or for unexpected costs.  Aim for about 6 months of expenses in an emergency savings account.
  3. Use a portion towards your post-tax retirement fund: If you aren’t already maxing out your yearly retirement contribution, this is a good time to increase your contribution without feeling the pinch on your lifestyle that is sometimes felt when the monthly contribution is increased.
  4. Start an investment portfolio:  Oftentimes people want to invest, but they believe that they don’t have the money.  Using your tax refund gives you extra income that can be used to invest.  However, given that investing is risky, be sure that you have adequate savings, paid off credit card debt, and are adequately contributing to your retirement first.
  5. 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.  Take a portion of your refund check to do something special for yourself.  Maybe you want to allocate something towards a vacation or spend it on something for yourself. Historically, I’ve used about 25% of my refund on a guilt-free purchase just for me.  Your perfect amount really depends on your needs with Strategies 1-4.

So, what have you learned from this article?  Please be sure to share your takeaways and how you plan to implement these tips.