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Smart Ways to Spend Your Tax Refund - USAA Community.jpg


If you’re expecting a tax refund this year, chances are you are already thinking about how to spend it. Have you thought about where this additional money can put you financially? Think of your tax refund as just another paycheck that comes in, and give that money a purpose.


Here are some smart ways to spend your tax refund:


Start or add money to your emergency fund


If you don’t already have an emergency fund, perhaps this is the perfect time to get one started. You never know what life could throw your way, and many of us are one paycheck away from being in a serious financial crisis.


Pay down/off high-interest debt


If you have any loans or credit cards with high interest rates, pay them down or off completely. This will surely put your refund to work and help relieve some of those high monthly payments.


Apply a principal payment to your mortgage


You could potentially save thousands of dollars in interest when you make an additional payment straight into principal. Check with your mortgage company first to ensure there are no additional fees or penalties.


Home repairs/improvements


Perhaps you have a home improvement project you have been wanting to start, but just didn’t have the fund to cover it. Making repairs is not only good for you in the sense that you get to cross it off your to-do list, but it will also boost the value of your home.


Invest in you


While all of the above are ways to help you succeed and get ahead financially, you also need to remember that it is okay to invest in yourself. Whether that is taking a portion of your refund to invest in your education or health, those are two investments that you will reap the benefits of for years to come. Also, don’t be afraid or feel guilty about treating yourself out to dinner, or perhaps a date night with your spouse. You’ve worked hard and we all deserve a break.


How will you spend your tax refund? Share with us in the comments below.


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About the blogger: Angela Caban is an Army National Guard spouse, published author and branding expert. In 2010, she founded the Homefront United Network, a military spouse and family support blog created to assist spouses who do not live near an installation, but also focusing on bridging the gap between National Guard, Reserve and Active Duty spouses. She has an extensive background in Human Resources and Communications, with her Bachelor’s in Business Administration and a Master’s in Human Resources. Angela resides in the beautiful Garden State of New Jersey with her husband and two children.

Occasional Contributor

Twice in the first paragraph, the word "return" is used where it should say "refund". Incidentally, this mistake also appears in the banner that links to this blog on the USAA Community front page.

The term "tax return" refers to a formal report that must be filed annually in order to reconcile with the IRS. For most people, Form 1040 is their tax return. The return has no cash value, is not a paycheck, and cannot be spent on anything. It's just a report. If it is determined through the tax return process that you overpayed through withholding, a "tax refund" may be issued to you in the form of a check or direct deposit. So:


"Think of your tax refund as just another paycheck that comes in, and give that money a purpose."


Yes, this is semantics. But when people know the correct terminology it can reduce their stress and confusion around tax season. Advice like this should strive to be concise.


Thank you, @CNeal. We have gone ahead and made those changes. I appreciate the time you took to point that out. Hope you have a great week, thank you for being a part of Community!

Occasional Visitor

Awesome article. Very basic for people to know how to save their money. I like saving for the future. Who knows what tomorrow brings?


These are very good ways to to spend your refund. This money is actually an "interest free" loan you made to Uncle Sam. Why not modify your W-4 so that no or very  little excess money is withheld for taxes?  (See or talk to your payroll people) This will be equivalent to giving yourself a pay raise which you can send or transfer to a savings account. Investing this money in a "blend" type of mutual fund won't  be a bad idea either.




Thanks for your comment and ideas! Looking forward to more posts from you in community.