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Aisha Taylor promo headshotWe are well into tax season and the last day to file taxes or request an extension is April 15th. If you receive a refund, think about how you will allocate your refund before receipt.  It’s easier to decide and commit ahead of time instead of waiting until the money is begging to be spent once it is in your bank account.

My recommendation is to divide your tax refund so that you can accomplish your financial priorities and still have fun. When I receive my refund, I take 10% off of the top to tithe, and then I divide the remaining 90% into thirds. I use my first third to increase my savings. I use the second third to retire debt, and the remaining third on a guilt-free splurge. Following those steps allowed me to allocate my money where I needed it the most and still do something for myself.

This allocation may look different for you. I’ve been using the divide into thirds strategy for years because I like that I can narrow down my spending to the top 2 major financial priorities and then still have something leftover for me. I have even used this strategy for work bonuses as well. Your top two financial priorities may look different than mine. You may need to get a car or a home repair, make a major purchase, pay for childcare expenses, contribute to a retirement plan, increase savings, or invest in your business. However, the message is the same – use the money to improve your financial health but take the time to enjoy it as well.

Here are seven ways that you can use that tax refund:

  1. Catch up on bills. Sometimes things happen. Between unplanned expenses, medical expenses, and extra activities for the kids sometimes you fall behind on bills. If you are not current, please pay your bills first. Also, if things like childcare costs are stressing you every month, then take some of the tax refund money and apply it to the childcare expenses to get ahead and give you a little breathing room during the month.
  2. Pay down credit card debt: Reducing or eliminating your credit card balance will save you money on future interest payments and also help to improve your credit score. It is also motivating to see your balances shrink, which will inspire you to keep going towards achieving your financial goals. If you don’t have credit cards, then think of other debt, especially debt with high-interest rates, that you may be able to reduce with a lump sum payment
  3. Enhance your savings: Developing a savings cushion is crucial.  An emergency savings account helps to cover you during tough economic times or for unexpected costs.  Aim for about six months of expenses in an emergency savings account.
  4. Use a portion towards your retirement fund: If you aren’t already maxing out your yearly retirement contribution, this is a good time to make a contribution without feeling the pinch in your monthly budget.
  5. Fund your child’s education. According to Investopedia, one year of in-state tuition for the 2015- 2016 school year is about $24,000 and private school is double. Your tax refund can be used to fund part of your child’s college savings account. Conversely, if your child is enrolled in a private grade school, you can use funds to pay for school.
  6. Start an investment portfolio: Often people want to invest, but they believe that they don’t have the money.  Using your tax refund gives you extra income that can be used to invest.  However, given that investing is risky be sure that you have adequate savings, paid off credit card debt, and are adequately contributing to your retirement first.
  7. Do something for you: It’s imperative that you maintain balance in your life.  You do not have to allocate 100% of your tax refund to shore up your finances or even spend 100% on your children.  The amount that you can spend on yourself depends on your current financial situation including outstanding bills, debt, and planned expenses. However, it is important to do something just for you even if it is just getting a 90-minute massage.

Remember, there is no one size fits all for spending your tax refund. The important thing is that you plan in advance for how you will use it. Use some for your financial priorities, but don’t forget yourself in the process.

Are you planning to get a tax refund? How will you use it? Please be sure to share your takeaways and how you plan to implement these tips.


Aisha Taylor, the founder of Frugal-n-Phenomenal (FNPhenomenal), is a financial freedom expert who brings a modern and fresh twist to wealth consciousness.

As the founder of FNPhenomenal she has dedicated her life to building up others and equipping them with the knowledge and resources to be true and legendary change agents within their communities. FNPhenomenal helps women break the vicious cycle of bad money habits by providing them with simple “Every Day Living Principles” that will show them how to live frugally yet phenomenally.

To learn more about FNPhenomenal and how they can serve you or your group,

please visit their website at FNPhenomenal.com, Follow @FNPhenomenal or email the FNPhenomenal team at aishataylor@fnphenomenal.com.

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