The No-Regrets Way to Spend Your Tax Refund

There’s only one thing to keep in mind to maximize those extra dollars ...

Written by Erin Lowell  |  on


It’s that time of year again—tax refund season! A magical time for some of us, perhaps less magical for others.

If you’re one of the lucky ducks with a refund check headed your way, you might also be wondering what to do with the extra dough. How responsible of you. 👏

… and, it’s a great question, so why not ask the experts? YNABers are pros at giving every dollar a job, so we posted over on Facebook to find out how they’re using their tax refund money.

Keep reading for a not-so-deep analysis of the results from that post. (And, many thanks to the fine folks who responded. It was fun to read your comments!)

How YNABers Use Their Tax Refunds

As one might expect, YNABers are enthusiastic budgeters (after trying YNAB, it’s hard not to be). As such, they gave their tax refund dollars one of three jobs:

  1. Saving
  2. Spending
  3. Debt Paydown

But, dig a little deeper, and things get more interesting …

Many commenters split their refunds to pay for multiple things.

Others used the cash to finish off a big financial goal (e.g., the previously mentioned debt paydown).

And some YNABers used their refund to finally make it to the magical land of Being a Month Ahead.

And, even if you’re not finishing a goal, you can still make notable progress.

And, there’s nothing wrong with the tried-and-true “wait and see” approach.

In this last example, notice that our commenter gave those dollars a job—the job to wait for reassignment!

The Common Denominator

Based on our data, you might be thinking, “Maybe I should put more money towards debt paydown?” or “Man, I’m not saving enough.”

But, here’s the kicker, it’s not really about which category they budgeted those dollars to. The most important thing you can take away from our findings is that, no matter where the dollars went, every single YNABer used their tax refund for the same thing—their priorities!

That’s all it comes down to. When money lands in your bank account—whether it’s from a tax return, birthday money, your regular paycheck, whatever—just look at that pile and ask yourself: “What does this money need to do before more money arrives?”

Or, in this YNABer’s words:

So, What’s Important to You?

Where do you want to make progress financially? As long as you’re staying true to that, you can’t be wrong!


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Your Next Step

Budgeting is not restrictive. You won’t be spending less, you’ll be spending right. So what do you have to lose? Except all that debt and stress?