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Six Ways to Use Your Tax Refund

If you’re expecting a tax refund this year, now is the best time to start planning how you’ll use the extra money. The best uses are to pare down debt and bulk up your savings. For instance, you can:

1. Open an emergency fund or add to your existing one. Aim to save enough to cover three to six months of expenses for those unexpected emergencies, like your car breaks down, your refrigerator dies, or you lose your job. Put your tax refund into a savings account specifically for these emergencies. 

2. Fund your retirement account. Your retirement income depends on how much you save now. Even if you contribute regularly, you may need retirement income to last you for up to 20 years. You can never save too much. Adding your tax refund is a smart way to make sure you’re covered for the long haul.  

3. Start a college fund for your child. College is expensive and you can’t count on scholarships. Using your refund to start a college fund is a worthwhile investment in your child’s future. Not to mention, saving now will help you avoid coming up with large tuition fees in the future.  

4. Take a class to improve your career prospects. If you think you lack certain skills to get ahead in your career, use the refund to purchase classes to sharpen your skills. 

5. Pay off debt. Use your refund to pay off any high-interest-rate credit card debt or loans you may have. Try to pay off the debt in full to stop accruing interest charges monthly that add to your balance. 

6. Start a Christmas Club account. This account lets you save for holiday spending year-round so you don’t have to rely on credit cards in December. If your employer offers direct deposit, or you can schedule transfers from your bank account, make saving even easier by having a set amount automatically deposited to the Holiday Club account.

Copyright 2019 Credit Union National Association Inc.