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5 Smart Ways to Use Your Tax Refund

5 Smart Ways to Use Your Tax Refund

03.18.2022 / Community First Credit Union
Financial Well-being

Updated 1/29/26

A tax refund can feel like a welcome bonus, but it’s also a powerful chance to strengthen your financial future. Rather than letting that money quietly disappear into everyday spending, you can use it to pay down debt, build savings, or move closer to your long-term goals. By making a few intentional choices now, your refund can provide benefits that last far beyond this year’s tax season.

1. Pay Down Debt

Average annual interest rates for credit cards and personal loans aren’t getting any cheaper. Work to pay off that credit card before making other decisions is a smart move. There are other ways to consolidate debt too, so you can start a new year with a fresh financial perspective!  

You can also make an extra home mortgage payment or two. You won’t feel this benefit immediately, but doubling up now can save you months, or even years, of mortgage payments later. Future you will thank you. 

2. Fund Your Retirement Account

Speaking of future you, if you haven’t started investing in a retirement account, now is the time. A great use for the extra cash is making a contribution to get started, or to simply get ahead.

3. Open an Emergency Account

Did you know that most Americans don’t have any money set aside for financial emergencies? Any size tax refund is a great start for an emergency account. While experts recommend that it should eventually total between three and six months’ worth of essential living expenses, anything is better than nothing. Half the battle is getting into the habit of saving. Plus, we all know these things happen when you have no back up cash. You can also use your savings account to help meet other financial goals, like saving for a home. There are many benefits of having a sound savings plan!

4. Pay for Repairs

Take good care of your expensive possessions. You put the initial investment in, but don’t forget to keep the maintenance going to make the most out of your purchase. This can save you a ton stress in the long run. Use the money to repair a leaky roof, upgrade an appliance, or take your car in for that service you’ve avoided. A busted transmission costs a lot more than the fluid that goes in it. If you look around, you can most likely find things you've been avoiding that need some TLC. You'll thank yourself later.

5. Invest in Yourself

Investing in your emotional, physical, intellectual health, and career growth is a wise use of money. Feeling a bit burned out? Plan a vacation. If you are in a good financial position, then go ahead and treat yourself. Whether it’s paying for a gym membership or a cooking class, you’ll feel effects of this type of investment fast.

Don’t forget, while earning, saving and being smart with your money is key, it’s also something to be enjoyed. And if you are still undecided on what you want to do with your tax return, don’t forget we have our moveUP Financial Wellness team that can help you out, whenever you need it.

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