It’s not everyday that you go to the mail box and find a check for a couple thousand dollars.

That’s what it feels like when you get a tax refund. Winning Publisher’s Clearing house.

Remember the days of seeing the host of Publisher’s Clearing House? A guy would show up at your front door with balloons and a massive check the size of a road sign.

Well cue the confetti because you’re about to win big. It’s tax refund time.

With regard to a tax refund, there are two kinds of people:

  1. Those who dread tax season and can’t wait for it to be over
  2. Those anxiously awaiting their big fat tax refund check.

What most people don’t realize is that receiving a tax refund is like getting an interest-free loan from the IRS.

You get a tax refund when you are withholding too much of your income. That allows the IRS to use it all year at a 0% interest rate.

Although, this is not always the case. You can withhold the right amount, and still get a refund because of tax credits or several other reasons.

When you do have a refund coming, it feels like bonus money you haven’t counted. It’s exhilarating.

Instead of blowing your refund money on a new pool, car or vacation (even though those things sound like so much fun) I’ve got several ways to help you get financially ahead this year.

Here’s 10 ways to use your tax refund check to be a winner this year to make a difference in your financial future:

1. Free Yourself From Debt

If you have a debt of any kind, I urge you to do this first! Paying off your debt can be the best investment for your future that you will make with that money. By paying off your debt, you are guaranteed a return on your investment equal to the interest rate you were paying your loaner.

If you don’t have enough to pay off your debt completely, put your tax refund money towards it and consider adjusting the amount you are withholding from your paycheck monthly so you can get access to this money now and pay off your debt sooner.

Consider making your payment towards the debt with the highest interest. This extra payment will have the most impact on your debt future and will give you the most significant return for your buck.

If you can pay off your debt completely, that will give you extra money in your budget each month to use for a savings goals or other vital areas of your budget that were neglected during your debt payoff period.

2. Give Yourself Peace Of Mind

One of the top reasons most people worry is because they aren’t prepared for unexpected expenses. Having cash on hand for flat tires, a flooded home, or a sudden job loss means the emergency is less devastating.

If you don’t already have an emergency fund, you should put this money directly into one right away.

Ideally, you will want to have enough in your emergency fund for three months worth of living expenses. Using your tax refund to start building up your emergency fund (or adding to it) is a great way to give yourself a little peace of mind, and prepare for a sudden emergency.

Having a large emergency fund means you can also potentially raise your deductibles for health insurance or car insurance.

Doing this will reduce your regular monthly expenses, further saving you even more each year!

3. Make Improvements To Your Home

Your home is your most expensive investment, and doing some necessary home improvements could pay off big!

If you have an old central heating or A/C system, replacing it could end up saving you money on your utilities. This will help lower your regular monthly expense and save you money.

We replaced our A/C system a couple years ago and not only did our electric bill go down $100/month but we also keep the temp slightly cooler. Win-Win. Happy Dance Time!

Here’s 5 home improvement options that’ll save your monthly expenses:

  1. Energy efficient light bulbs
  2. Landscaping that helps combat the summer heat (such as large trees that block strategic windows from the sun)
  3. Stainless Steel appliances
  4. Efficient water heater
  5. A fresh coat of paint

These home improvements will end up lowering other expenses around your home, making them a worthy use of your money.

Make sure you are using your refund for actual home improvements that you will use, not something you might use. Remember that if your tax refund can’t pay for the entire home improvement, you can’t afford it!

4. Allow Yourself To Get A Month Ahead

The average tax refund is around $1,000 to $3,000! For many of us, this equals almost an entire month’s worth of bills and expenses (it might exclude your mortgage).

If you struggle staying on budget or have irregular income, getting a month ahead of your income can be extremely beneficial.

Open up another checking account (James and I have eight checking accounts) and put an entire month’s of expenses (or whatever your tax refund will cover), and use this month for next month’s expenses. Then, the next month, put all the money you make in that checking account and do it again and again.

When you are a whole month ahead, it gives you a massive amount of breathing room and allows you to sleep at night.

5. Invest In Yourself

Not all of the money you get back has to be used for a higher purpose. If you feel that none of the above options are in your best interest, investing in yourself might be a good option.

Consider using it to take a continuing education class at your local community college to potentially start a side hustle to make some extra income. With all the online courses available these days, you could quickly learn a skill and then market it to people you know. Maybe even invest in an MLM and start selling things at home parties. I have several friends who sell Pampered Chef and Proverbs 31 bags and make good money each month.

When I was in elementary school my Mom took some night classes at our local community college and my sister and I were both allowed to attend with her. We learned sign language and how to dismantle and rebuild a lawn mower (random fact, I know). While neither of those skills translated into a side income for my Mom, it enriched her life and that of mine and my sisters as well. Well worth the cost.

One other thing, you could also use your refund to replace your computer so you could start a Virtual Assistant business, or to start selling things on eBay, Amazon or Facebook Marketplace. The sky’s the limit with making money online.

6. Make An Annual Payment

Some bills such as Amazon Prime, Costco, your home owner association and a few of your other expenses might allow you to save money by paying your bill annually or semiannually instead of monthly.

Even some bigger bills such as your car insurance, homeowners insurance or property tax can be paid in advance to save approximately 10%.

But it’s not easy to save up this kind of cash to make a larger payment all at once.

Use your tax refund to get ahead and then make sure to set aside the money you were spending each month to build up until it’s time to pay again and reap the savings! Do your research before throwing money at your bills to make sure you do get savings by paying all up front.

7. Take 8 Years Off Your Mortgage

Did you know that by making just one extra payment on your mortgage a year, you could pay off your loan 8 years sooner? That’s 96 less mortgage payments!

Essentially what you are doing is paying off the principle faster which means if you sell it, you’ll get a bigger amount on the sale.

I know you won’t “feel” this payment immediately like you would if you reduce your electric by replacing your A/C, but it will certainly pay off in the future in the case of paying less interest on your overall loan.

8. Prepare For Your Child’s Future

College is costly! These days even an in-state tuition could cost you around $3,400 or more each year, and that’s if they stay off campus and choose not to have an on-campus meal plan.

Even without tuition, college still comes with additional costs. Textbooks, supplies for courses, and even gas to get back and forth to class can add up quite a bit.

Consider putting some of those hard earned tax dollars toward college. You can save it in a 529 plan for your child, or put some money away for yourself.

This small investment will give you a leg up when it’s time for college and can help you avoid student loan debt.

9. Shield Your Income From Paying Taxes

One year we were going to have pay on our taxes.

We went to a tax accountant to have our taxes looked at in case we missed any potential deductions. She told us that if we put money into our own retirement savings account, called an IRA (which has a deadline of April 15th of the year AFTER you are filing), it would reduce our income enough to not have to pay anything.

That is basically shielding our money and delaying paying taxes on it until later, when we are retired.

It might not work in all cases, but it taught us a valuable lesson to invest in our future retirement. And it is worth mentioning for you to look into as well.

10. Donate To Charity

This tip will also benefit your tax year later because donations to charity are a tax write off.

Find an organization you care about, or your church, and consider writing a big check to them instead of yourself.

Giving always makes us feel really good. And you know your money will be benefiting others.

On a final note, remember that a tax refund is given when you’ve overpaid on your taxes. This means that you have been getting less on your paychecks throughout the year because of this. It’s actually smarter to talk to your employer and adjust your tax amount, to give you more money during the year and reduce how much you get back next year.

Talking about extra money is always a touchy subject. And when you get a nice size tax refund, it can be really tempting to use some of it to splurge. Especially when you work so hard during the year.

Thomas Jefferson said, “If you want something you have never had, you must be willing to do something you have never done.”

This year, don’t let your tax refund money blow away like a Publisher’s Clearing house balloon.

Instead use it to get ahead financially and make a difference that lasts long into the rest of the year.


YOUR TURN: What do you usually use your tax return on? What are you gonna use if for this year? Share with me in the comments below.

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How To Use Your Tax Refund To Win For You This Year