Spender or Saver? Tips For What You Should Do with Your Tax Refund

My husband and I just checked our bank accounts this week and noticed that our federal tax refund came in! Even before it came in, we sat down to talk about how we’d like to use that money as we have very different ways of handling money. My husband is more of a saver so he’s keen on building up our stash, whereas I’m more of a spender who’d like to use some of that money to knock down our mortgage.

Besides using it to give our financial goals a boost, we also plan to use the money to have a bit of fun too. It’s okay to balance out your savings with a little bit of spending here and there! Don’t feel like you have to limit yourself or your finances, as it’s important to have a good balance. In the end, no matter your approach, there are a handful of ways you can make your tax refund go further. 

Seeing that a big chunk of money hit your bank account can be motivational in making a dent on your savings goals. Here’s how you can stash your cash and help it grow:

• Emergency Fund: Life happens and when it does, it usually comes with a price tag. Protect yourself from a financial mess by starting or growing your emergency fund. Need a goal? Try to save up for at least one month’s worth of essential expenses — it’ll give you peace of mind and strengthen your finances.
• House Fund: If you’re thinking of buying home down the line, one of the wisest moves is getting your down payment as big as possible. Having 20% or more down can help you avoid private mortgage insurance and give you a much more manageable mortgage payment.
• Saving Up for a Baby: Little ones can have a way of making a big impact and that begins with their arrival. That first year is especially big (both with life and finances)! Make things easier on yourself by stashing away some of your refund so that you’ll be able to focus on your baby instead of worrying about the bills.
• Dream Fund: Have you ever dreamed of starting a business or a charity? Do you want to go back to school and get that degree or make a pivot in your life? Investing in yourself is a fantastic way to enrich your life and your finances. Save a portion of your tax refund for your dreams, so you can make the leap debt-free when the opportunity arrives.
• Retirement Nest Egg: Would you like to give your future self a huge leg up when it comes to retirement? Go ahead and invest some of your tax refund now so it’ll have decades to grow into a sizable nest egg! Don’t forget that TurboTax Deluxe will also help you take advantage of retirement-related income tax deductions.

Spending doesn’t automatically mean you’re wasting money. Here are three ways you can spend your tax refund this year!

• Paying Off Debt: You can really give yourself a lot of buffer and wiggle room in your budget by paying down or off some debt. Review your budget on Mint and choose a debt or two to knock out using your tax refund.
• Car Replacement: One of the best ways you can keep your cash flow under control is by reducing the amount of debt you take on. Car payments can drain your budget and leave on the hook for a car that’s worth less than the loan! If you want to break the cycle, start a car fund so when you have to replace your current vehicle, you either have a no or a low car payment.
• Debt-Free Vacation: Just because you’re financially savvy doesn’t mean you can’t have some fun! Do you have a dream destination or you looking to unwind and unplug? Set aside some of your tax refund to pay for your next vacation, debt free. You’ll be happy both during the trip and afterward!

If you use TurboTax, you’ll receive the maximum tax refund (guaranteed) and will be one step closer to spending it on (or saving it for) the things you love the most.