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What Should You Do with Your Tax Refund?

Posted on March 4, 2019

It’s tax season and depending on your finances, that could mean an extra expense for your wallet or a much wanted return from the IRS. If you find yourself expecting a large refund, you might be asking yourself what to do with it, and we’ve got tips on how to best use it.

Don't Blow it All in One Place


man writing the word TAX on a piece of paper with a penThat refund hits your bank account, and it’s hard not to think of what you could get yourself. It might sounds wonderful to buy that huge TV, treat your friends to a well deserved night out, or go on a shopping spree at the mall, but you can use it for so much more.

If your return isn’t something substantial for your finances, go ahead and treat yourself a little. Just don’t go overboard and dip into your other finances because you felt like you deserved something nice because you got a tax return.

Build Your Emergency Fund


As of 2018, at least 55 million americans don’t have an emergency fund. If you fall into this group of risky americans, take this opportunity to protect yourself. Take your tax return and create your emergency fund. That way, if your car breaks down, you get extremely sick, or you lose your job, you have money you can fall back on.

A good practice for an emergency fund is to create a seperate savings account solely for emergencies. That way, you’re less likely to touch the cash for bills and common expenses.

As for how large your emergency fund should be, a good goal is have enough saved up to cover three to six months of income. It might take a couple of years of saving your refund to get to that point, but it’s a very smart use for it.

Budget It Out for the Rest of the Year


Your tax refund is not a gift from the government, it’s your income you overpaid on in your regular income tax. So, if you feel like your monthly budget is a bit too close for comfort, take your refund and include it in your planning.

Break it up by 12 months and give yourself some extra wiggle room each month. Pick a regular expense and schedule for your tax refund to cover it. Or, if you have a larger expense every year, like car insurance or healthcare costs, make a plan to use your refund for those.

If you have outstanding debts, putting your refund towards those could make a huge dent, or even get rid of them entirely. Then, money that would be going towards that debt is freed up for others items in your budget, or could even go into a savings account.

Make an Investment and Grow It


stack of gold barsWhile it sounds like something only the wealthy use, anybody can make money off of investing. If you don’t have a pressing need to use your tax refund, putting it aside with the intention of having it grow is a financially smart move.

When people think about investing, their first impression is usually buying and selling stocks, but in reality, investing is simply growing your money. If you aren’t looking to jump into the world of Wall Street, Pioneer has some investments that might interest you.

Our Term Certificates are an investment tool to grow your money passively. You pick how much you want to invest, ranging from $500 to over $10,000, choose how long you want to let it grow, and move on with your life. When time is up, you get paid your investment back, plus extra.

If you don’t want to commit your money to a term certificate and want to be able to use it just in case, we also offer a Money Market Savings Account, which act like a normal Savings Account but for much higher balances and you can earn a much higher dividend. That means earning more money each month just by having your money in it.

If there is no pressing need for your money, invest it! Open up a Pioneer Term Certificate when your tax refund comes back and start growing your wealth!

Open a Term Certificate Now!

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