11 smart ways to spend your tax refund, according to personal finance experts

11 smart ways to spend your tax refund, according to personal finance experts


This might be the single biggest chunk of money you receive all year. Still, “It’s not a windfall. It’s money you earned all year long. You worked for it, so you may as well use it to achieve your goals instead of blowing it,” Beck says.

Financial expert Jennifer Streaks agrees. “I’m not against doing fun things,” she says. “But there’s nothing wrong with putting aside some money first. I would never say you should blow your entire return. Put some back into something that will improve your life.”

She’d limit splurge spending to 25 percent of your return at most, and even that depends on how you define a splurge. “A good pair of work boots you’re going to wear every day? OK, fine,” she says. But a pair of Christian Louboutins? Not so much.

And don’t overlook the value of making your financial situation more comfortable. Although it might not have the wow factor of a day at the spa, it can bring a degree of peace to your life to worry less about money. “To not be financially stressed about everyday bills to me is so worth it,” Streaks says.


Our experts agree that starting or growing your emergency fund is the first place you should park your refund dollars. Without an emergency fund, you’ll be forced to turn to debt when an unexpected cost pops up. Ideally, you should build up enough savings to cover your expenses for six to eight months.

If your emergency account is funded, you can work toward other saving goals:

  • Your retirement. You have until April 15 to contribute to an IRA for 2018.
  • A child’s education. Contribute to a 529 plan and sock away money for college expenses.
  • That new car or big vacation. Maybe there’s a large purchase in your future. Beck recommends setting up a savings account just for your goal. “People are more motivated to save when they see what the money is going toward, rather than just saving,” she says. “When you see your progress and you know why you’re saving you want to keep doing it.”

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