STAY ALERT: Gulf Winds will NEVER contact you directly and ask for usernames, passwords or verification codes. If you have concerns about a call’s legitimacy, hang up IMMEDIATELY and call us back at 850-479-9601. Learn more.

Skip to main content

Smart Ways to Use Your Tax Refund

Tax season is over, leaving the majority of Americans with some sort of federal tax refund. According to the IRS, the average federal tax refund this year was about $3,000 per taxpayer. It can be easy to spend this money carelessly on shopping sprees, vacations, or other self-indulgent purchases. While it’s nice to have this extra chunk of change at your disposal, there are a number of ways to use your tax refund that can improve your financial and personal well-being.

Contribute to an Emergency Fund

Life can be unexpected. Having an emergency fund can act as a financial cushion for life’s unexpected expenses. According to a recent survey from, less than 40% of Americans can pay an unexpected $1,000 expense. Likewise, 1 in 3 Americans have more in credit card debt than they do in emergency savings. Contributing all or part of your tax refund to an emergency savings account can help pay for whatever unexpected expenses may come your way without putting you in financial ruin.

Consolidate Debt

Most Americans have some sort of credit card debt. That said, one smart way of using your tax refund is to help pay off that debt. Paying off credit debt not only takes a financial weight off your shoulders, it may also help you better achieve your financial goals. Additionally, paying off this debt may help improve your credit score. Using your tax refund to help pay off student loans can also be beneficial to your financial well-being. The more money you put toward paying off your student loans, the sooner they’ll be gone. Just be sure your financial institution does not incur penalties for payments that are larger than normal.

Fund your Retirement Account

We all hope to retire one day. Although retirement might seem far off for some, it’s closer than you may think. One of the best ways you can save for retirement is by contributing to an individual retirement account (IRA). Doing so allows your money to grow via compounding interest. There are two types of IRAs, traditional and Roth. People under 50 years old can contribute $7,000 a year to their IRAs, while those over 50 can contribute $8,000 a year. For more information about IRAs, be sure to check out our blog on the topic.

Finance Home Improvement Projects

Home renovations and improvements can be costly. If you’ve been itching to make improvements to your home, your tax refund is a great way to finance those projects. Making improvements to your home can increase its overall resale value. Some projects may also help you save money over time. Common home improvement projects include remodeling bathrooms, painting walls, replacing windows, and investing in more energy-efficient appliances. There are also several low-cost home renovations to consider, which you can find by visiting our blog.

Invest in Higher Education

Higher education can lead to higher paying jobs. An excellent way of using your tax refund is by financing higher education, either for yourself or your children. According to the Education Data Initiative, the average cost of college tuition per year is about $35,000 before financial aid. Why not use your tax refund to help finance tuition? Using your tax refund to finance higher education also means borrowing less money in student loans. Again, the fewer student loans you take out, the quicker you can pay them off and the sooner a financial weight will be lifted from your shoulders. 


Oftentimes, you have to spend money to make money. While investing money does carry risks, the gains can be worth it. There are many investment types out there, including bonds and certificates of deposit. Each investment type carries different risk levels, with higher risks typically resulting in higher payouts. If you’re more frugal in your investment endeavors, consider reading up on low-risk investments. Stocks are a tried and true investment type, with even the lowest risk stocks receiving some form of payout. If you’re interested in investing in stocks, be sure to check out our blog highlighting the different stock types.

It’s always smart to put extra income to good use. It’s even better if that extra money can improve your financial or personal well-being. Instead of letting your federal tax refund burn a hole in your pocket, use it wisely. You may thank yourself later.

Hunter Morrison

Hunter Morrison

About Hunter Morrison

Hunter has freelanced for various print and radio publications across Northwest Florida, including The Bay Beacon, Navarre Press, Inweekly, Crestview News Bulletin, and WUWF. He was also the Editor in Chief of the University of West Florida’s student newspaper, The Voyager. In 2023, Hunter moved to Kenai, Alaska to take up a news reporting position with KDLL Public Radio. For fun, Hunter enjoys cross-country skiing, hiking, photography, thrifting, traveling, and looking for the best Thai food around. 

Subscribe to Our Blog

Get the best of the Save. Spend. Live. Blog and other helpful financial education resources straight to your inbox. Sign up today and start living your best financial life.