Living on Less: 5 Smart Ways to Use Your Tax Refund – Now’s the time to make a plan so you don’t end up wondering where your money went. Try one of these 5 smart ways to use your tax refund.
Buy something you need.
Receiving “extra” money is always nice and it’s fun to spend some of it frivolously just for the sake of enjoying it. Spending money with “no strings attached” can also help you be more disciplined with the rest of your finances.
Chances are, though, if you are living on less you have some household needs that have gone unmet. Set aside a small amount to go out to dinner or do a fun, inexpensive activity with your family then set aside a portion of the money to purchase something you need.
Start an emergency fund.
Speaking of needs, everybody needs a back-up plan. If you are unconvinced read 3 Reasons You Need an Emergency Fund (and how to get one fast) here.
A terrific use of your tax refund money is to start an emergency fund. Experts suggest 3 to 6 months of living expenses for a full emergency fund but putting away as little as $500 can give you a great jump start.
Save for vacation.
Everyone can use a little time away but if you finance your vacation with credit cards your happy feelings will soon fade. Why not start a vacation fund with part of your refund and add to it for the next few months. When it’s time to plan your vacation check the amount of money you have saved and make your choices based on that amount.
Pay off debt.
If you have credit card or other debt, this is the perfect time to pay it down. Once you make a dent in the amount you owe you’ll feel better and more energized to keep knocking that debt down to zero.
Give it away.
It feels great to be able to help others. Why not give part of your refund to a charity or non-profit organization that you believe in? They will appreciate the help and you can feel good knowing that you used your money for a higher purpose.
If you’re not receiving a tax refund this year, congratulations! That probably means that your income is high enough to pay taxes and a bigger income can be a good thing. 🙂
How are you planning to use your refund? Leave a comment.
Click here to go to The Peaceful Mom Facebook page and read how others are using their tax refund.
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The Peaceful Mom says
I am so glad to help LaTasha!
LaTasha Toney says
Hello. This year, I chose to save a big chunk of my return and I am glad that I did. I am also a single lady but your blog has been a blessing!!
The Peaceful Mom says
Ooh, love the idea of buying extra groceries Jaime!
Last year we got a pretty big amount, so we went to Sam’s Club and stocked up on a bunch of stuff as well as enough food for a month’s worth of meals. =) This year I don’t think we’re getting much, but what we do get we might put into savings for our trip to New York later this year.
We used ours to give first, save second, and pay off debt third. We were able to finally pay my husband’s school loans off!!!
That’s great Meg! It must feel terrific to have those loans gone.
We sold our family car last year to pay off debt and build up our emergency fund. So we used our taxes to buy a used vehicle. Its so nice to be able to leave the house during the day!!!
Jerilyn, I am honestly so excited for you. I know what it’s like to have one vehicle – not fun sometimes. Good for you for sacrificing to win financially!
We paid off 6 credit cards!!! Yay! 🙂
That’s amazing Amber! Way to go!
Heather @ I do what I want. says
I used mine to pay down credit card debt. I should be credit card debt free next month, woooooo!
That is awesome Heather!
We have had to have car repairs done and so some will go to that. The rest will go towards paying off a loan. We will use that monthly amount to pay down our home equity.
Great plan Em!
My husband and I are getting a refund for the first time since we’ve been married (5 years). We’re using it to pay off 4 of our debts, and I’m thrilled to be able to do that!
Woohoo!!!! Way to go Rachel!