You worked hard last year, and with Tax Day approaching in April, your tax return will soon be filed. Now it’s time to ponder what you might do with your tax refund when it finds its way to your bank account. Check out these 10 smart ways to put your tax refund to good use.
1. Create (or add to) emergency fund
Emergencies come in all shapes and sizes and can render us helpless on a variety of financial levels. That’s why it’s so important to have money set aside for whatever difficulties we might experience. If you’re not much of a saver, now is the time to begin building up an account of at least six month’s worth of take-home pay. At some point, you will probably need it.
2. Fund an individual retirement account
Whether you’re 21 and just starting a new job with no thoughts of retirement, or 60 and still working while doing your retirement planning for the day when you’re “free,” funding an individual retirement account is important. Putting your refund to work through an IRA will get you a step closer to a comfortable retirement…whenever that day comes. Help is available if you’re interested in calculating how much you’ll need to retire.
3. Pay off credit cards (holiday debt)
The gift-giving season is over for another year and now the bills are beginning to arrive. And, you may have bills left over from early 2015. Get those off the books and become debt-free now with the help of your refund.
4. Add to (or purchase) life insurance
Life insurance is not typically a subject people want to talk about. But, if you are a caregiver, if you have children, or if your family counts on your income, you need life insurance. It can pay for your final expenses, pay off a mortgage, help with college costs, and preserve wealth for your beneficiaries. Find out how much life insurance is right for your situation. If you do have life insurance, it’s always a good idea to review your coverage so it fits your current needs.
5. Pay off college loans
Even if you’re regularly paying down your (or your children’s) college debt, add some extra from your refund. It’s even more important if you hadn’t saved anything at all for college and took out several large loans which now need to be repaid.
6. Give to your favorite charity
We all have a cause that’s meaningful to us and needs our help. What better way to use your refund than to help others? Your continued support also sets a great example for the entire family. Consider donating to the Royal Neighbors Foundation to help empower women financially.
7. Begin (or add to) your children’s scholarship fund
The cost of a college education continues to rise and starting a fund for your children (or yourself) should be on your radar if it isn’t already. Using your tax refund would be a good place to begin. While college is on your mind, remember Royal Neighbors offers a scholarship program for members with life insurance or an annuity.
8. Pay off your car (or start a car fund)
Cars aren’t a luxury as they were back in the early 1900s before Henry Ford manufactured the first car that many middle class Americans could afford. Today they’re nearly a necessity. So if you have a car payment, try to at least reduce the debt now. If your car has seen better days, or if you see another car in your future because your teen will be driving soon, begin a car fund now so you’ll be prepared.
9. Make home improvements
There are many reasons for updating your home. You may need to expand for a new baby, your mother-in-law, or an office. You may be thinking of downsizing and improvements may help ease the sale of your current home. And, there is typically an “expiration date” on big-ticket items around your home (roof, siding, furnace/air conditioner, etc.). Keep your home from “expiring” with your refund.
10. Pay ahead on your mortgage
The more money you put toward your house payment, the sooner it will be paid off and you’ll save on interest, too.
The above does not constitute legal, tax, or financial advice. Please consult a licensed professional for recommendations applicable to your specific situation.
TRN00056; Rev. 4-2025
