Splurge or Save?

9 Ways to Use Your Tax Refund

Tax Day has come and gone, but our returns are just hitting our bank accounts. There was a time when we spent our tax refunds on a new handbag or some fresh Js. Now, we’ve got grown-woman goals and we’re going to be sure to get ours.

The experts agree that being ready for the future is one of the best ways to use your tax return. Dasha Kennedy, of The Broke Black Girl, says saving and investing is a good rule of thumb. “But hold off on investing unless you have savings—cash on demand—that you can use in the case of an emergency,” she said.

Clarissa Moore, of The Budget Queen blog, agrees. “If you don’t already have at least $5,000 saved for emergencies, you should put your tax refund toward an Emergency Fund that can be used for emergency expenses.”

Stay ready so you don’t have to get ready

Adding some or all of your tax return to your emergency fund can be a smart move. Having at least six months of expenses on hand is clutch to be ready for whatever life throws at you: a broke-down car, unexpected home expense, or a job change, for example.

Pay down credit card bills

The more you can pay down higher-interest credit cards, the better off you’ll be in the long run. Monthly interest can creep up on you, making you pay more than double the purchase price of your item if you’re not careful.

Higher ed.

Even though federal student loans have been put on hold again by the President, you still owe if you paid for college with private loans. Make sure you’re actively paying your bill for your private loans to avoid defaulting.

Plan for retirement

Future you thanks you for your funds. Make life a little easier for you down the road by setting up or contributing to your 401(k) or a Traditional or Roth IRA.

Invest it

Investing used to mean putting your money in the stock market, and you can absolutely do that. But now might be the time to invest in yourself. If there’s a class you’ve been wanting to take or a skill you’ve been wanting to learn, you can use part of your tax return to explore something new.

College fund contributions

Consider contributing to a state 529 plan or other college savings account for the little ones in your life. These college savings accounts can be used for tuition, books and room and board.

Home improvements

Use some extra funds to fix up your place or change your address altogether. Your tax return could be used as a deposit or down payment on someplace new, or for that new lighting and furniture you’ve been peeping.

Give it away now

When we’ve been blessed, we know it’s nice to bless others. (You can be rewarded for your good deed, too.) When you donate to a qualified charitable organization, your contribution can help make real change in your community, and be real change in your pocket as a tax deduction next year.

You deserve it

It’s OK to treat yourself. You’ve worked hard for your money and deserve to enjoy it. Splurge on that item you’ve been saving for, or finally take that girls’ trip with your crew. Enjoy it!