Advertiser Disclosure

This post may contain affiliate links. We may earn a fee, at no cost to you, if you buy after clicking on the links.

5 Smart Ways to Spend Your Income Tax Refund

Some of us expects an income tax refund this year from Uncle Sam. But before you think of spending it on things that you don’t really need, think again and use it towards something that really matters like saving for retirementThe average  income tax refund is usually around $3000, and most people get that money within three weeks of filing their income tax returns.

Whether it’s paying off debt or creating an emergency fund, there are smart ways to spend that extra $3000 money. Here are some ways to spend your tax refund check that will give you long term benefits:

FIY, this article may contain affiliate links.Please see our disclosure policy for more information.

1. Beef up your emergency fund.

If you have an emergency fund already to cover your expenses in case of an unexpected job loss or medical bill, then that’s good.

Even if you have one, why not beef it up with your income tax refund. Keep that cash in an online high-yield savings account. There, your tax money will grow with the power of compounding interest. For example, if you put $3000 tax refund into a high interest savings account that earns 5% interest, in 5 years, you will have $3850.

Check out: How To Grow Your Savings Faster With Online Savings Accounts

2. Invest in a retirement fund.

Another best use of your tax refund is to invest it in Roth IRA, traditional IRA or a 401(k). Why?

Because saving for your retirement is important. You need to make sure you have enough money to live off when you can no longer work. See how much you’ll need to save for retirement by using this retirement calculator.

3. Use your tax refund to pay off your debt.

Use that refund to pay off a credit card debt that’s charging you 18 to 22% interest. Because credit cards tend to have higher interest rates than other forms of credit, it makes more sense to pay off those debts first.

4. Use your tax refund to pay off your student loans faster.

Also, if you have student loans or any type of personal loans, you can use that money to pay them off. Paying off debt means you will pay less in interest and you will save more money in the long run.

Related: 4 Hot Tips to Pay Off Your Student Loans Faster (Tip # 4 is a Winner)

5. Buy a real estate property.

Depending on how much income tax refund you expect to receive this year, some or all of that money can be used toward a down payment for a rental property.
Coming up with 20% down for a down payment on a house can be tough. So your tax refund check can help a great deal.

Related: Best Tips to Save For a Down Payment on a House

6. Invest in yourself.

Another best use for your your tax refund money is to invest in yourself. Use some of that income tax refund to learn about how to make and save money. Buy books and magazines about personal finances. The more you learn about personal finances, the more you will be able to take control of your money and eventually achieve financial success.

Article Comments

We invite readers to respond with questions or comments. Comments may be held for moderation and will be published according to our comment policy. Comments are the opinions of their authors; they do not represent the views or opinions of Growth Rapidly. Comments have not been reviewed or approved by any advertiser, nor are they reviewed, approved, or endorsed by our partners. It is not our partner’s responsibility to ensure all posts or questions are answered.

2 Replies to “5 Smart Ways to Spend Your Income Tax Refund”

  1. Thank you for these ideas. I want to make smart choices with my refund . I appreciate you for giving me different ways to save and invest .

    1. Edna, you’re welcome. One of the main goals of this blog is to give its readers independent and insightful information on saving money, make money, and build wealth. I am glad I am able to help.

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like