Suze Orman: 6 Best Ways To Use a Large Tax Refund To Become Financially Secure
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Laura Beck
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Molly Sullivan
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Tax refunds hit differently this year. Financial expert Suze Orman said that economists expect households to receive significantly larger refunds than usual due to new tax rules Congress passed last year.
The average federal tax refund of around $3,000 might rise by another $1,000 or more, according to some estimates. Orman’s concern is that people will spend the windfall rather than strengthen their financial position.
“I want you to use any tax refund as an opportunity to build financial security, not just buy things,” Orman wrote in a recent blog post. She called the advice “extra important right now” given economic stress signals including slowed job growth and businesses increasingly using artificial intelligence for jobs previously requiring human staff.
Orman recommended six specific uses for an unexpectedly large tax refund.
1. Emergency Savings Gets Priority
Building emergency reserves ranks first on Orman’s list. “Every dollar here gives you peace of mind and protection,” she said.
The recommendation makes particular sense given current economic uncertainty. Job security concerns have risen across multiple industries as companies explore AI replacements for human workers. An emergency fund covering three to six months of expenses provides breathing room if employment situations change suddenly.
High-yield savings accounts currently offer around 4% to 5% annual percentage yields, meaning a $4,000 tax refund deposit immediately starts earning $160 to $200 yearly in interest while remaining accessible for emergencies.
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2. Attack Credit Card Debt Strategically
Orman suggested paying down high-interest credit card debt but added an important qualifier. “First, see if you qualify for a zero-rate balance transfer credit card offer, then attack that balance,” she said.
Balance transfer cards typically offer 0% APR for 12 to 21 months on transferred balances. Moving a $4,000 balance from a card charging 22% interest to a 0% promotional card saves approximately $880 in interest over a year while the entire payment goes toward principal.
The strategy requires discipline to pay off the balance before the promotional period ends. Missing that deadline means facing deferred interest charges or high ongoing rates.
3. Maintenance Spending That Saves Money
Car and home maintenance made Orman’s list as smart refund uses. “Avoiding costly repairs and extending the life of your current car means not having to deal with today’s insanely expensive new and used-car market,” she wrote.
The math supports this approach. Regular maintenance like oil changes, tire rotations and brake inspections costs hundreds of dollars but prevents thousands in major repairs. New car prices average over $48,000 while used cars that would have cost $20,000 a few years ago now run $30,000 or more.
Home maintenance follows similar logic. “It not only can mean avoiding bigger repair costs down the line, but it also keeps the value of your home stronger,” Orman said. A $500 roof repair now prevents a $15,000 roof replacement later.
4. Retirement Account Contributions
Boosting retirement savings made the list with specific numbers. “For 2026, the Roth IRA contribution limit has increased to $7,500 ($8,600 if you’re 50 or older),” Orman noted.
A $4,000 tax refund deposited into a Roth IRA grows tax-free for decades. Assuming 7% average annual returns, that $4,000 becomes approximately $31,000 in 30 years without any additional contributions. The Roth structure means withdrawals in retirement come out completely tax-free.
The strategy works particularly well for younger workers who have time for compound growth to work its magic. Someone in their 30s depositing tax refunds annually into a Roth IRA builds substantial tax-free retirement wealth.
5. Invest In Skills
Orman’s final recommendation addressed job security concerns directly. “If you are worried about job security, especially in a field where artificial intelligence is already being used, consider how to make your resume as up-to-date as possible,” she said.
She suggested online courses or community college classes if current employers don’t cover continuing education costs. Spending $1,000 from a tax refund on professional certifications or skill development can mean the difference between staying employed or facing job searches in competitive markets.
Fields facing AI disruption including customer service, data entry, basic accounting and content creation all require workers to develop higher-level skills that complement rather than compete with automation.
6. The Need Versus Want Question
Orman wrapped her advice with a philosophical challenge. “Is this a need, or a want?” she asked readers to consider before spending refunds.
“If there is any part of your financial life that gnaws at you right now, the kindest and smartest move you can make today is to limit your spending–be it a tax refund or your regular income–on wants,” Orman wrote. She emphasized that financial peace of mind represents the greatest need.
The discipline to direct windfall money toward security rather than consumption separates those who build wealth from those who perpetually struggle financially. Tax refunds represent found money that doesn’t appear in monthly budgets, making them psychologically easier to save or invest rather than spend.
Orman’s hope is simple: “I hope you prove them wrong” about economists’ expectations that households will simply spend larger refunds this year.
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