About a week ago, we filed our taxes.  Because we know we are getting a refund, we file as early as we can. So people are starting to think about tax refunds now. After you know you are getting a refund, you need to decide how you are going to spend it.  Most people think about buying fun stuff like a new big screen television or even some big vacation.  However, you need to think about needs versus wants and what will be the most frugal way to spend your money.  Here are a few ideas to help you decide how to use your refund money more frugally.

Paying Credit Cards

Paying off credit cards is a great use for income tax refund money.  That will mean one less monthly bill for your family.  If it is a high interest credit card, it will be even more beneficial for you to get rid of it.  If your refund is not high enough to pay it off, consider paying it down as much as you can.

Start  or Add to an Emergency Fund

Having money on hand for emergencies is a great way to be ready for the unexpected.  I have been stuck several times with big items like cars, refrigerators, and washers breaking without a way to pay for those items.  Having an emergency fund prevents you from doing without or going in debt to get those items you need. If you already have an emergency fund, consider adding some of your refund to it.

Save for a Garden

Last year we used some of our refund for building a raised garden.  We bought the soil, plants and the actual bed.  We were able to have fresh tomatoes and cucumbers most of the summer.  A garden is really an investment as we bought less produce in the summer from the grocery and it tasted so much better straight from the garden.  We plan to add another raised bed this year with our refund money.

Improve Your Home

Using your refund to improve your home is a great way to use tax refund money frugally.  Pick a project you have been waiting to do that will increase the value of your home.  Maybe you want to remodel your kitchen or a bathroom or even put in new carpet.  All of these would be great uses for your money.

Start a New Car Fund

Our cars do not last forever, so decided to start saving for one you may need in the future.  This is a great use of tax refund money and will make buying a new car seem less like a burden and something you can really do.  If you don’t need a new car consider putting aside some money for upkeep of the car you have.

Pay Off Student Loans

Consider using refund money to pay off student or other loans.  This will be one less bill you have and you can sometimes even save on the interest you would have paid.

Pay Yearly Insurance

We used to pay monthly for our car insurance.  Now we use tax refund money or bonus money from jobs to pay yearly for our car insurance and save money by paying it like that and its one less bill to think about every month.  If you don’t have enough to pay monthly, consider paying for six months, you will still save some money.

Vacation Account

If you plan to go on a vacation and are saving each month, you could consider putting some of your refund into an account for your trip.  By having that money on hand, you will not go in debt to go on vacation.  You will be going on a “paid for vacation,”

Important Items You Need

There are lots of things we need that there is no way we would be able to buy with just our monthly salary.  We wait for tax refunds or job bonuses to buy those things.  These are usually things that cost a lot like a refrigerator, washer/dryer, or a couch.  This year we are planning to buy a new mattress for our bed.

Donate To a Charity

Tax refunds do not count toward your annual income, so it could provide a major deduction toward next year.  There are lots of really great organizations that could use your help if you want to donate all or even part of your refund to them.