Tax Refunds: to Spend or Not to Spend? - Quicken Loans BlogMonday’s are generally my least favorite days of the week. This past Monday was no different. It all started when I woke up. The realization that football season is officially over until August hit me at precisely the same time I realized my rent payment was late. Not a good way to start the day, right? That was only the beginning.

A half hour later, I opened my front door to start my car using my remote starter. Of course the temperature was below freezing and snow was falling (have I mentioned I hate winter?). Oh, and to top it off, my car wouldn’t start. This all happened in a matter of about an hour. To make a long story short, a neighbor helped me jump start my car and I was two hours late to work. After work, I got my car battery checked. To top off what had already been a terrible day, I was told I needed a new battery. AWESOME!

While it probably seems like nothing could brighten up a crappy day like I had, that’s actually not true. In fact, I got a little reminder that made me somewhat forget about everything that happened earlier. Any idea what that reminder could have been? I’ll give you a hint: it’s got something to do with a small chunk of cash coming my way in the near future. I’m talking about my tax refund.

Before you get excited, it’s important to remember that not everyone receives a refund. It all depends on what you claimed on your taxes throughout the year. If you claimed “0” on your taxes, you had more money taken out of your paychecks, which means you’ll get money back in the form of a tax refund. If you claimed “1,” you had a little less taken out of your paychecks, which means you’ll most likely get some money back. If you claimed “2,” you could end up owing money because you had the least amount of money taken out of your paychecks.

For the purpose of this blog, we’re going to pretend that you will receive a tax refund of $1,000. What would you do with that $1,000? It’s a question that many people will have to answer over the next several months. Is the money burning so much of a hole in your pocket that you need to spend it ASAP, or are you fine hiding it away in your savings? I’ll give you some suggestions on what to do with the money below.

Emergency fund

I’m sure the first thing you want to do after receiving a check for $1,000 is not spend it, right? Well, putting some of that money into a savings account to give yourself some leeway in case you run into a financial bind might not be a bad idea. It’s recommended that you have at least six months of funds saved up in case you get laid off or have to take an unexpected and extended leave from work. It’s also nice to have some extra money for when you have car problems, such as a battery that needs to be replaced.

Pay debt

Whether it’s credit card debt or school loans, why not put some (or all) of the money toward getting rid of your debt? The quicker you take care of the debt, the less you’ll have to worry about it in the future. Just think, if you pay it off now, you can use your next tax return for something else.

If you don’t have any credit card debt or school loans to pay off, why not put the money into an account to use strictly for paying car payments, rent, or cable and internet? That way, you won’t be taking money out of your paychecks to pay for those because you can use your tax refund to take care of the bills.


Do you know that it’s recommended to start saving for your retirement in your 20s? That may come as a surprise to you, but when you think about it, it makes sense. The sooner you start saving, the more money you’ll have when you retire. There are many different ways to begin saving, including IRAs and 401(k)s, so do some research before making your selection.


Is there anything you or your family really needs? Make sure to take care of the necessities before anything else. Have you been putting off getting a cavity filled because you haven’t had the money? What about getting new brakes on your car? It’s probably better that you take care of these issues before they develop into something worse.


Even I can admit that the first four ideas seem boring. Who wants to save money when they can use it to have fun? I’ll give you the OK to do that only if you have an established emergency fund, no debt, an existing retirement fund and zero needs. If you fall into that category, why not take a vacation? As I’ve mentioned on countless other occasions, I’m not a fan of the winter. A nice trip down to Florida to relax on the beach and golf 18 holes sounds like a dream come true to me. If you can swing it (financially and golf speaking), take a vacation.


If you don’t need anything and don’t want to take a vacation, what do you want? If it were me, I’d consider a new set of golf clubs or season tickets for my favorite sports team. If you aren’t a big sports fan, how about a shopping spree at the mall?

Home improvements

Are you looking to remodel your basement or add on to your house? If so, your tax refund is a good place to start. It probably won’t cover the entire cost if you’re looking to make some major modifications, but it’ll help lessen the blow.

Now that I’ve given you several ideas on how to use your tax refund, what else could you use your refund for? Let us know in the comments section below!


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