14 Frugal Uses for an Income Tax Refund

Photo (cc) by Muffet

I got a big income tax refund last year. Well, I would have, if I hadn’t applied it toward the quarterly taxes I pay as a freelancer.

What are you going to do with your refund, if any? My MSN Money colleague Liz Pulliam Weston suggests spending 10 percent of any windfall on something non-essential. But don’t let the rest of the money trickle away.

I’m not going to address the idea that tax refunds are of the devil, i.e., that you gave the government an interest-free loan all year. It’s not optimal, I agree. But for some people – like those who don’t yet have the discipline to save – a tax refund makes sense. (In my case it doesn’t. It just means I overpaid. Working on that.)

Instead, I’m going to address some useful ways to spend the money…

Financial fixes

1. Pay down your credit card balance. After you’ve given yourself that 10 percent treat, throw whatever’s left at your consumer debt. If it’s a large balance, you may not feel that you’re making much difference. You are, though.

2. Seed money for your emergency fund. Again, even a smallish refund is a start. Once you’ve got an account seeded, you’d be surprised how exciting it can be to add to it, even if (especially if) you are living paycheck to paycheck. For tips on squeezing blood from that particular turnip, see my Get Rich Slowly column, “Think you can’t afford an emergency fund? Think again!

3. Build your own personal food bank. Fill your larder with dry beans, tuna, canned tomatoes, pasta, sugar, flour, oatmeal, and the like. A well-stocked pantry means less temptation to order in – and if there’s a financial crisis such as illness or layoff, you’ll have plenty to eat. Extra frugal points if you buy some of this stuff on sale with coupons.

4. Retirement savings. Don’t have a plan where you work? Let your tax refund be the beginnings of a more secure old age. Research this on your own or meet with a professional. Just do it. This year. Please.

Toward a healthier you

5. Visit the dentist. Start watching now for new-patient specials (which usually include X-rays) or even for social commerce deals through Groupon et al. I’ve seen deals for X-rays, an exam, a cleaning, and a teeth-whitening kit for $29. That’s not a typo.

6. Visit the optometrist. How old are those glasses, anyway? Look for deals through social media (see above) or in the Sunday coupon inserts for discount vision centers.

7. See a doctor. When was your last physical? Maybe quite some time ago, if you don’t have health insurance. Look for a community or public health clinic, where you’ll pay based on your income – and with a tax refund, you’ll be able to pay cash. Remember, there are “silent” ailments that can do major damage. Get yourself checked out.

A year’s worth of savings

8. Prepay your car insurance. See if there’s a discount for paying 12 months at a time rather than twice a year or, heaven forbid, monthly.

9. Warehouse club membership. A dedicated couponer can beat Costco’s or Sam’s prices on many staples. If you’re not a clipper, a warehouse club might be the place for you. Better to buy a crate of toilet paper at a fixed price than to pay more if TP isn’t on sale the week you run out. Memberships don’t cost much.

10. Transit pass. If I commuted by bus in Seattle I’d pay $2.25 to $2.50 each way, or $22.50 to $35 a week. A monthly pass costs $81 to $90, and I’d get to use it evenings and weekends too. See if you can get a monthly pass where you live.

Frugal hacks

11. Buy discounted gift cards. Do you purchase cat litter at PetSmart or Petco? Get your hair cut at Regis? Outfit your kids via Kohls clearances? Stretch your dollars even further by paying with gift cards obtained on the secondary market. You’ll see discounts of anywhere from 5 to 20 percent (or more) on a ton of everyday items as well as treats like movie theaters and restaurants. Go to the GiftCardGranny.com aggregator site and see who’s got the best price.

12. Home improvement. Not granite countertops or new cabinetry, but something that will impact the bottom line. Examples: new windows to replace some of the heat-leaking old ones; an energy-efficient fridge; the down payment on a new furnace or whole-house fan system. Cheaper fixes: a low-flow showerhead, faucet aerators, compact fluorescent bulbs, weatherstripping. Extra frugal points if you invest in a home-improvement item that generates a tax credit for next year.

13. Supermarket gift cards. At least one chain was willing to tack on an additional 10 percent when I bought a $300 gift card. Does your store do this? Having the card with you will let you take advantage of manager’s specials or bonanzas in the dented-can bin.

14. Pamper your wheels. If you change your own oil, get a case of your car’s preferred brand (look for loss leaders at auto centers) and the filters to match. Stash replacement wiper blades, some windshield fluid, and any other odds and ends you might need this year. Check your tires – if they’re looking worn, start watching for sales. (The best price might be at the warehouse club you just joined.)

Readers: Got any ideas to share? How are you using your income tax refund, if any?

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
7 Reasons Workers Age 65 and Older Have Not Retired Yet
7 Reasons Workers Age 65 and Older Have Not Retired Yet

For some, the golden years are a time to increase the gold — but their reasons for delaying retirement vary widely.

5 Ways to Save up $500,000 in 15 Years
5 Ways to Save up $500,000 in 15 Years

Even if you’re behind in preparing for retirement, there’s still a way to pull together a solid nest egg if you focus.

14 Products That Keep Foods Fresh Longer
14 Products That Keep Foods Fresh Longer

We’ve rounded up innovative Amazon purchases to lengthen the life of your favorite foods and beverages.

5 Secrets to Keeping Your Brain Sharp as You Age
5 Secrets to Keeping Your Brain Sharp as You Age

Forget young at heart — science says these tricks will keep you young in mind.

70% of Older Adults Botch This Basic Retirement Question
70% of Older Adults Botch This Basic Retirement Question

Can you answer this fundamental retirement income question?

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

9 Deep Discounts Available on Amazon This Friday
9 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

20 Things That Are Actually Worth Stockpiling
20 Things That Are Actually Worth Stockpiling

You don’t need a year’s supply of toilet paper to survive an outbreak, but consider stocking up on these items.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

Do This in the Car If You Want to Avoid COVID-19
Do This in the Car If You Want to Avoid COVID-19

It takes just seconds to take this simple preventive measure.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

15 Products You Need — Even If You Didn’t Know It
15 Products You Need — Even If You Didn’t Know It

Discover some must-have products on Amazon that you didn’t even know you were missing.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.