The Best Uses for Your Tax Refund, According To Financial Experts

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If you filed your 2021 taxes on time, you’ve almost certainly already pocketed your tax refund. In the first pandemic year without stimulus payments, it’s the only windfall most families have received in 2022.

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If your refund cash is still in the bank, you’ll want to think carefully about where you direct it. If not, there’s always next year’s refund to prepare for. GOBankingRates asked the experts to help guide you in the right direction.

Shrink Your Debt and That Stack of Bills

Paying down debt is not the stuff that dreams are made of, but when you’re behind the eight ball, needs trump wants.

“The best way to spend your tax refund is to pay down high-interest debt,” said Chloe Choe, owner of Off Hour Hustle. “High-interest debt will restrict you from reaching your financial goals, and it’s important to pay it off as soon as possible.”

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Save It for a Rainy Day

“Building up your piggy bank for a rainy day is going to save you a lot of heartbreak when your finance plans fall through,” said Amanda Sullivan, a research analyst with CreditDonkey. “Placing extra money in an emergency savings account will help you be prepared for the worst.”

If your emergency fund is already flush and you have kids pursuing higher education, a college fund is a great place for your tax refund to land.

“Whether you’re just starting the college fund or you need to boost it, using your tax refund to do so is a wise move to make and can help you pay for your kids to go to college down the road,” said Julie Ramhold, a consumer analyst with “Make sure … you choose an account that will accrue at least some interest so that you’re always earning a little something as you build it up over time.”

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Invest It in a Smart, Safe Fund

“I would recommend investing in real estate because the risks are generally low but the rewards are high,” said Carter Seuthe, CEO, Credit Summit. “An attainable option is REITs.”

Seuthe speaks of real estate investment trusts, which allow you to buy into real estate without owning a physical property through funds that are bought and sold in shares just like stocks.

Oliver David, founder of Green in Black and White, is a fan of a different kind of alternative investment.

“A TFSA is a tax-free savings account that lets you withdraw money at any time,” David said. “It is placed in different investments that either you or an investment agent chooses that will earn you more money over time. This is a great way to use your tax return and will be helpful in the long term.”

Invest It in Your Home

If you’re a homeowner, the smartest long-term investment might not be in stocks or real estate — unless it’s the real estate you live in.

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“One of the best ways to spend your tax refund is to use it to repair or upgrade something around the house,” said Matthew Robbs, founder of Smart Saving Advice. “You will get to enjoy that repair or upgrade every day, and long term it will also increase the value of your home.”

Invest It in Yourself

Another option is to spend your tax refund on a new-and-improved future version of yourself.

“Using your tax refund to invest in stocks or real estate could be a worthwhile financial investment, but you should also use some of that money to invest in yourself,” said Erin Ellis, an accredited financial counselor with Philadelphia Federal Credit Union.

“Do you need some more professional clothes? Buy a few versatile pieces that can help you feel more confident. Is there a skill you’ve wanted to learn to help advance your career? Sign up for a class or seminar where you can attain that knowledge. Want to exercise more or eat healthier? Look into affordable gym memberships or nutrition programs that can work for you. These are all opportunities to use your money in ways that will benefit you in the long run.”

If You Can Afford It, Let Loose a Little

If you have the means, treating yourself is the single best thing you can do.

“You don’t have to deprive yourself of some extra self-care,” said Jeffrey Zhou, co-founder and CEO of Fig Loans. “Use your tax refund to treat yourself to a relaxing spa massage or a satisfying meal. A little luxury once in a while is fine if that’s going to help you keep your sanity and make you feel better — because you can’t pour from an empty cup.”

Use It To Get Away

“This might not be the most sensible or money-savvy idea; but, after the global pandemic, we’ve had [more than] two years of our lives wasted and are unable to get them back,” said Karl Tippins, finance expert at Pension Times. “This might be your time to do something fun, unexpected and live wild for a moment. You can’t take your money with you at the end, so enjoy it while you can.”

Give It Away

Spending your refund on yourself might make you feel good, but spending it on someone else could make you feel great.

“Spend it on other people,” said Krishna Rungta, founder of Guru99. “Use your tax refund to make a donation to a good cause or invest in someone else’s future. Consider giving some of your refunds to a friend or family member in need, or investing in a program that helps others in your community. You’ll feel good about helping out and you may even create some new relationships along the way.”

Brian Bram, founder and CEO of Home Gym Strength, concurs.

“Help other people in need in your community,” he said. “Helping others is a great way to make a difference in your community and also makes you feel good about yourself. It’s a win-win situation. So why not take some time this spring to find an organization that needs your help and do what you can to support them?

“Try donating money or time to a local charity, volunteering at a homeless shelter or soup kitchen or taking part in a food drive. It doesn’t need to be huge. What matters is that you helped and made a difference, and you’ll certainly be glad you did — and nothing can ever replace that feeling.”

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About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for, a financial publication in the heart of Wall Street's investment community in New York City.
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