Three friends try on hats and shoes at a shop

Whether you file your taxes yourself, enlist the help of an online service or advisor, or forward your W2 along to mom and dad and let them take care of the rest (no judgement here), you probably have your fingers crossed, hoping for a refund from the IRS.

Because everyone’s earnings, deductions, and credits vary, the amount you receive back will vary. In 2019, the average tax refund was $2,869 (a 1.4% decrease from the previous year) — but, in some instances, you might not receive a refund. Or you might even owe money.

If you do end up with extra cash in your bank account this year, what will you do with it? While you may want to take a look at your deductions and see if you need to make any adjustments for next year, here is an inspirational list of fun, forward-thinking, and financially freeing ideas to help you put your windfall to good use.

If you want to be a savvy saver …

  1. Invest in your retirement.

Why not give future you a little boost? Stashing away your sudden influx of cash in an  investment account now will give it plenty of time to grow over the years — which could also make it a smart addition to your retirement plan. Additionally, if you don’t already have an IRA, or Individual Retirement Account, this could be a great time to open one and get started.

  1. Bolster your emergency fund.

Ideally, your emergency fund holds three to six months’ worth of expenses — but it can be tough to grow your savings when you’ve got bills to pay, groceries to buy, and life to live. Your tax refund can add a nice cushion to your rainy day fund, which you’ll probably be thankful to have at some point. (Hey, unexpected expenses are inevitable.)

  1. Build a CD ladder.

Laddering CDs (certificates of deposit) is a simple strategy that can make your savings perform smarter for you. Rather than keep your extra cash stored in a savings account, building a CD ladder, which you can do at any bank, will allow your tax refund to grow at an even higher rate, without all of it being tied up for several years at a time.

  1. Pay down credit card debt.

Credit card debt is expensive and incurs some of the highest interest rates you’ll see — making it even more difficult to eliminate. When you have the chance to knock some of it out, take advantage of the opportunity.

If you’re in the mood to treat yo’ self …

  1. Make a down payment on a car.

Thinking of upgrading your ride? Using your tax return to supplement your down payment is a great way to get in a new set of wheels. That’s because the more you can put down (20% of the car’s price is often a suggested goal), the less you’ll pay monthly, while saving on interest.

  1. Take a vacation.

You might be surprised at how far you can go with your tax refund. Whether you’re in the mood to visit somewhere tropical, historical, or cultural, use this do-re-mi for some P-T-O. Or stash it in a savings bucket dedicated to vacations, so it can grow until you’re ready to hit the road.

  1. Invest in something special.

Maybe you’ve dreamed of owning an original piece of art to hang in your bedroom, or you’re planning on proposing to your partner in a few months. If you’ve had your eye on a special item that’s out of your typical budget, this could be the boost you need to help you buy.

If you love to share …

  1. Adopt a pet.

Repeat after us: Pets are expensive. If you’re hoping to expand your family with a furry friend, you might consider using your tax refund to adopt a pet, cover its adoption and initial vet fees, and stock up on food (and some toys, of course). That way, you’ll start pet parenthood off on the right paw.

  1. Donate to your favorite cause.

Giving to a charity or other organization is a selfless act that can provide a deeply joyful feeling. But for many budgets, making regular donations is simply not feasible. Donating a portion of your tax refund to a charity that’s important to you can be a meaningful way to make the most of your money.

  1. Send your kiddos to summer camp.

A week away is often an unforgettable experience — but it typically isn’t cheap. Day camps can cost a couple hundred dollars a week, and overnight camps can range into the thousands. Put your tax return toward a week of fun for your kids (and just as important, a week of R&R for yourself).

If you’re seeking some change …

  1. Do something you’ve never done before.

Backpacking the Appalachian Trail? Front-row tickets to an NBA game? A deep-sea fishing charter? Forgo material items and use your refund to splurge on a once-in-a-lifetime experience.

  1. Redecorate a room.

You can only rearrange your living space so many times. Take this opportunity to finally buy a new coffee table, reupholster your dining room chairs, invest in a hall rug, go eco-friendly, or lather on a fresh coat of paint to finally give your space the look you’ve been creating on Pinterest.

  1. Learn something new.

Use your extra chunk of change to expand your horizons. Put it toward learning a new skill, like taking a cooking class, getting your yoga certification, or registering for a public speaking workshop. Or use it to enroll in a class at your local community college on a topic that interests you.

  1. Ramp up your fitness journey.

Whether you’re new to fitness or well into your wellness journey, you’ll probably agree that living healthy can be costly at times. So, consider setting aside your tax refund to cover gym costs or a membership to a fitness studio for a few months, or possibly even invest in a piece of exercise equipment for your house.

A windfall in your bank account is exciting, but it can also leave you overwhelmed by the options of how to use it. And without a specific plan, it can be easy to spend a little here, some there, and have nothing to really show for it.

So, before the direct deposit hits or the check finds your mailbox, take some time to think. That way, you’ll be prepared with a plan to make the most of your valuable tax refund.

Want to stash your refund away and watch it grow? Say hello to the smart savings tools in our Online Savings Account.

Learn more.