Here Are the Top 5 Things Filers Are Doing With Their Tax Refunds This Year

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Getting a tax refund? Read on to see what plans filers are making with that money. 

If you’ve finished filing your taxes, at this point, the only thing to do from here may be to sit back and wait for your refund to arrive. But if you’re getting a refund, it’s really important to put that money to good use. A recent survey by Empower Annuity Insurance Company of America found that these are the top five things taxpayers are doing with their refunds — and you may want to follow suit.

1. Adding to their savings

If you don’t have at least three month’s worth of essential bills in your savings account, then sticking your refund in the bank should be a top priority. Without a complete emergency fund, you might struggle financially in the event of a lost job or unplanned expense.

2. Paying off credit card debt

The longer you carry a balance on your credit cards, the more interest you might rack up. Plus, too much credit card debt could actually damage your credit score. So it definitely pays to use your refund to eliminate an outstanding balance, or at least chip away at one so it becomes smaller.

3. Buying groceries

Grocery prices were up over 10% on an annual basis in February. If you’ve been struggling to put food on the table, then it definitely makes sense to use your tax refund to restock your pantry and fridge. Consider focusing on staple items that can go a long way, like grains that serve as a base for different meals.

4. Paying rent

Falling behind on rent could put you at risk of eviction (not right away, but in time). If you have a past-due rent payment, or you need your refund to cover an upcoming one, then it certainly makes sense to use that money to keep a roof over your head.

5. Covering electric bills

Many people have been struggling with paying basic living expenses thanks to soaring inflation. If you need your tax refund to pay a utility bill, like your electric bill, then by all means, go for it.

Other ways to use your tax refund

It may be that your savings are solid, you don’t have any high-interest debt, and you’re able to cover your incoming bills with your paycheck alone. In that case, you still have an opportunity to make the most of your tax refund, even if you don’t need to use it for any of the purposes above.

For one thing, you could take that money and start funding an IRA for retirement. If you have kids, you could also use it to start building a college fund. And if you’re trying to grow your career, you can consider using your tax refund to invest in yourself by taking a course that teaches you skills that might lead to a promotion.

This isn’t to say that you can’t, or shouldn’t, use a portion of your tax refund for something fun — especially if you’re in good shape financially. But before you blow all of that money, think of the ways you can really put it to great use.

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