11 Tips for Making the Most of Your Tax Refund

Getting that tax refund check can tempt you to splurge on "stuff" that you later find you really didn't want or need. Instead of going on a shopping spree, be smart and think carefully about the best use of the money you get back. Follow these tips and put that money toward a carefully planned purchase, reducing your debt, or to give you a little extra financial cushion.

  • Retire your debts. Use your refund to pay down a high-interest credit card.
  • Start an emergency savings account. Financial experts recommend keeping a savings account with enough money to cover your expenses for three to six months.
  • Contribute to your Thrift Savings Plan. Saving for retirement is more important than ever. An extra contribution will help build savings for a secure future.
  • Roth TSP Investments. Traditionally, participants invest pre-tax dollars into their TSP accounts. With the Roth TSP, participants have the option to make Roth contributions, which allow participants to invest after-tax dollars into their TSP accounts too. Check out our article on Roth TSP Investments for more information.
  • Save for a down payment on a home or vehicle. If home or vehicle ownership is in your long-term plans, a larger down payment will lower your monthly payments and interest costs.
  • Do some preventive maintenance or improvements. Minor home or car repairs you make now could spare you a bigger future expense.
  • Save for college. If you have children, you can contribute to a college 529 savings plan for future college expenses.
  • Make an extra car or house payment. Just be sure there are no prepayment penalties and tell your lender to apply the extra funds to the principal balance, not the interest.
  • Reconsider your W-4 withholdings if you receive a large refund. Instead of giving the government an interest-free loan, make sure those funds go into your paycheck every month.
  • Consult with a financial planner. Make an appointment with an expert and do some long-range planning. Contact Military OneSource for information on free financial planning services.
  • Wait for your refund to arrive before spending it. If you can't fight the urge to splurge, don't spend your money in advance - pay cash after you receive your refund.


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