Spending and saving your tax return wisely (so you don’t end up with buyer’s remorse)

Discovering you are getting a tax return can be quite exciting – a bit of extra money coming in to stretch the budget! But you need a plan so you don’t blow through the money.

 These are the questions and discussions you should have about your tax return to make sure you spend (or save!) that refund without regrets.
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It’s tax return time and some people are getting back less than past years or needing to pay in, others are seeing returns that are larger than expected. It’s easy to get dollar bill signs floating in our eyes and want to go buy ALL THE THINGS!

But hold on!

Before you go on a spending spree at Target or Amazon, or book that dream vacation, take a look at this list of ideas of how to spend your tax return wisely, so you aren’t regretting your purchases when the rose colored glasses come off.

We are one of those families whose returns increased this year with the new tax laws. At first we were so excited and started making a list of all the projects and items we wanted to spend the money on. Actually it was a spreadsheet… with amounts. Sometimes we are nerdy like that 😉

When the refund finally arrived we were so relieved that we could go ahead with our plans, but these plans weren’t made overnight! We prayed and discussed to come up with a plan that would use the money as wisely as possible in our current season.

These are the questions and discussions you should have about your tax return to make sure you spend (or save!) that refund without regrets.

 These are the questions and discussions you should have about your tax return to make sure you spend (or save!) that refund without regrets.

What should you do when you find out you are getting a tax return?

  • Meet with your spouse

If you are married, hopefully you are already discussing your finances regularly. While Micah did the actual work of filing taxes, I was right there with him going through the process, nearly every step of the way. When we found out we were getting a larger than expected return, we immediately started formulating ideas.

We both shared ideas of what we’d like to spend money on. Anything and everything was put on the table so we could discuss all our options. Be respectful of what the other person’s wishes are, just as you’d want them to respect your ideas. It’s okay to dream crazy big, just keep your actual decisions grounded in reality 😉

  • Pray

As Christians, we want to be wise stewards of all God gives us, this includes our tax return. We want to make sure we are spending it in a way that shows we can be trusted with a little or an abundance.

  • Make a plan

As we listed all our crazy ideas we made a spreadsheet and tried to organize them from highest to lowest priority. We also added the money needed for each item. For instance, our couch is a disaster. It has multiple rips, the stuffing is coming out from several cushions, a few of the wooden structure pieces are broken, and it’s not very comfortable anymore. We had been on the hunt for a new couch for quite some time and finally found one we liked. We decided to set aside a portion of our return to purchase the couch with cash.

Fun story? We had earmarked a portion of our return for the couch, actually intending to buy two because of the size of our family. Two days after our return was deposited we walked into Costco and saw the couch we had picked out on clearance for $300 off. We bought it immediately! We went back later that day to buy the second and because it was the last one in stock, it was marked down an additional $100! We were able to get two couches for barely more than the cost of one. Plus we now have a little extra money that was set aside for couches to go towards another fund. It reminded me of all the little ways God provides.

I suggest only spending money on the items you both agree on completely. If money gets spent on an item that isn’t agreed upon it could cause resentment to grow between you and that is not a good plan!

What should you do when you receive your tax return?

  • Don’t spend anything

I know it is so tempting to go out and spend all the things. The day our refund was deposited I started looking up things on Amazon that were on my wish list. While there is always the option to return an item I’m not happy with, I’d rather not deal with the hassle.

If having the money in your account is too tempting, move it into a savings account so you don’t accidentally spend it before you have a plan in place.

  • Tithe

For typical paychecks, we tithe on the take-home amount, so our tax return is our chance to pay tithe on our gross income, plus extra.

  • Double check your plan

The money is here – are you sure the items you want to use your money for are still high priority? Are there items you can put off until later? Just because you have the money, doesn’t mean you must spend it. It won’t hurt to let it hang out in a savings account until you are positive you are making the right choice.

  • Ignore FOMO (Fear of Missing Out)

FOMO will tell you that you are going to regret not buying that thing everyone is talking about right now or going to that concert everyone else is attending. Guess what? You will probably regret spending the money more, especially if you are only doing it because of pressure to do what others are doing. That awesome new appliance? It’s probably not going anywhere. (It’s why I waited two years before jumping on the Instant Pot train!) That concert? Unless it’s a band you love dearly, you are probably not going to remember it twenty years from now.

 These are the questions and discussions you should have about your tax return to make sure you spend (or save!) that refund without regrets.

What is the best way to use your tax return?

This is definitely a question where the answers can vary based on your family, but consider these options.

  • Fund your emergency savings account

While we aren’t strict Dave Ramsey followers, we do have an emergency fund that we add to each month. Dave recommends starting at $1000 – it’s baby step #1 in his plan to financial freedom! While $1000 isn’t going to cover super drastic emergencies it will lessen the blow.

  • Pay off existing debt

If you are dealing with credit cards or other debt hanging over your head, using your tax return is a perfect chance to get caught up or even pay it down (maybe pay it off!).

If you are able to pay off a debt, consider using Dave Ramsey’s snowball method to start paying off your other debt faster.

  • Pay cash for a need

Is your car on your last legs? Is there a home project that you’ve been putting off for far too long? By using cash to pay for this large expense you will avoid the debt that most take on for these items, but also take care of your family.

Our stairs are falling apart (cheap flooring does not work well on stairs) so we are using part of our refund to put in quality treads and risers. Having five kids running up and down the stairs all day means we need something incredibly functional but still aesthetically pleasing. By doing the work ourselves we are going to save even more!

  • Donate to a favorite cause

There are a few ministries that we love to support, but often we are only able to do so in prayers and volunteering time. While I know these are greatly appreciated, money is often needed to keep ministries running.

  • Stock up on regular needs

Our biggest budget busters? Those regular household items that run out when I’m not paying attention. Things like the kids’ toothpaste and shampoo (because I swore I just bought three bottles when they were on sale last month!) or tissues because we all got hit with colds and used up the stash. It’s hard to do a big stock up for our big family and a smallish budget. Having some extra funds allows me to allocate towards those needs.

  • Don’t spend it at all

If your emergency fund is fully funded and you don’t have debt weighing you down, there is nothing wrong with putting the money in savings and letting it sit there. Just because you have money, doesn’t mean you have to spend it. Even if there are things on your wish list, it’s okay to wait and decide if they are truly necessary.

Years ago we wanted to replace my husbands old stereo. It was something he bought in high school and we were still using as our surround sound system. We wanted to upgrade to a quality receiver and speakers, something that would cost a large amount of money. We were determined to pay cash and find a good deal. As time went on and we moved to a new home, we ditched the surround sound system completely and only use the audio on the TV. A surround sound system wouldn’t work well in our current home so waiting to spend the money was a huge blessing in disguise.

What are fun ways to spend your tax return?

  • Staycation

Maybe your tax refund is enough to whisk you all away to a tropical paradise but for our family size and budget, it’s not feasible. But we could have a staycation! Lots of hotels in our area offer deals on certain nights of the week and have some pretty decent pools. There are plenty of attractions we’ve never tried and restaurants we want to eat at. Splurge a little and spend a weekend playing tourist in your hometown making all sorts of new family memories.

  • Family pictures

The last time we had professional photos taken was when our twins were born. They are now 4 ½ years old. But professional photography, at least the style I prefer, does not come cheap. And I completely understand why. Photographers are artists and a good one will understand lighting, composition, and how to get us to act naturally on camera. But this isn’t a typical budget item so using a tax refund seems like a fun and perfect chance to capture the family at this stage.

  • Doing random acts of kindness

I have a friend that did 40 random acts of kindness for her 40th birthday. She took cash inside zippered baggies with an attached note and went around town sprinkling kindness everywhere. She and her family hid dollar bills behind chip bags and candy bars at the gas station, tucked them under windshield wipers, and at RedBox kiosks.

I’ve always loved the idea of paying for someone’s meal at a restaurant, especially a family with multiple kids, because I know what a huge blessing that would be to us! Buy a bunch of Walmart gift cards to pass out to the homeless on the street or put together blessing bags to keep in your car for those asking for donations on the corner. There is no shortage of needs out there or no limit to the kindness you can spread!

 These are the questions and discussions you should have about your tax return to make sure you spend (or save!) that refund without regrets.

How do you decide how much of your tax return to spend?

This is definitely a conversation that needs to happen between you and your spouse. No one else is going to have the answer. If you frequently find yourself praying that the funds will last the month, I suggest saving most of it and only spending a small portion, if any. I know we will be saving a chunk for future house projects because a few of our appliances have been giving us the side eye lately. Or maybe that’s us giving them the side eye when they get a little wonky.

Whatever you decide, make sure you are on the same page. In my opinion, it’s better to err on the side of saving more rather than spending more.

No matter how much you received back from your tax return there are simple and thoughtful ways to use these funds. Consider your family needs, consider the season of life you are in, and prayerfully make a decision you are both comfortable with. By making smart choices now you can avoid the regret that can come in a few months when you are left with no extra funds and purchases you aren’t thrilled with after all.


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How do you decide what to do with a tax return? What are you spending yours on this year?

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 These are the questions and discussions you should have about your tax return to make sure you spend (or save!) that refund without regrets.

6 thoughts on “Spending and saving your tax return wisely (so you don’t end up with buyer’s remorse)”

  1. Great tips! We filed our taxes last night so we haven’t even gotten our return yet, and I was already perusing Amazon for this we’ve been wanting! Thanks for the reminder to be good stewards of the money God has trusted us with.

    1. You are so welcome, Halee. It’s incredibly easy to start throwing money at everything and much more difficult to take a step (or several) back to make the wise choices.

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