So You Got a Tax Refund, Now What?

So You Got a Tax Refund, Now What?

04.10.2025 - By: Anastasia Barbuzzi

The dopamine hit of seeing that tax refund land in your account? Unmatched. But before you let it all fly on a spontaneous trip or a shopping spree, let's talk strategy.

A tax refund is essentially your own money coming back into your account, so how can you make it work for you? From paying off high-interest debt to topping up your emergency fund, here are smart, satisfying ways to use it that support your financial goals—and still leave room for a little treat.

1. Tackle High-Interest Debt First

Got a lingering credit card balance or a personal loan that’s costing you in interest each month? Your refund could be your golden ticket to knocking it down—or wiping it out entirely. Paying off high-interest debt first helps you free up your monthly cash flow and avoid throwing money away on interest. Think of it as an investment in your peace of mind.

2. Start (or Top Up) Your Emergency Fund

If the past few years have taught us anything, it’s that life is unpredictable. An emergency fund is your financial safety net. Aim to save 3–6 months' worth of expenses, but don’t stress if that feels overwhelming—$500 in a high-interest savings account is a strong start, especially if you’re building from scratch. Future you will thank you when that unexpected expense pops up.

3. Contribute to Your TFSA

Your Tax-Free Savings Account (TFSA) isn’t just for saving—it’s for growing. Whether you're investing for a first home, your future business, or a someday-vacation to Bali, your TFSA lets your money grow tax-free. Using your refund to top up your TFSA is a savvy move that supports both your short-term goals and long-term dreams.

4. Put It Toward Your RRSP (and Get Ahead on Next Year’s Refund)

A win-win if there ever was one: contributing to your RRSP helps you save for retirement and reduces your taxable income—a.k.a, the key to possibly getting an even bigger refund next year. If you’ve got room in your RRSP, this move checks both the present and future boxes.

5. Invest in Yourself

Always wanted to take that course, earn that certification, or finally kick off your side hustle? Your tax refund could be the seed money to do just that. Strategic spending that supports your personal or professional growth can pay off in the long run—and in some cases, even lead to higher income.

6. Make a Lump-Sum Mortgage or Student Loan Payment

If you’re a homeowner or a recent grad, putting your refund toward your mortgage or student loans can help shave off interest and get you closer to the finish line. Even a one-time lump sum can make a bigger dent than you think.

7. Treat Yourself (Within Reason)

Treating yourself with a chunk of your tax refund is not money wasted. Whether it’s a nice dinner, a new outfit, or something just for fun, budgeting a small portion of your refund for a treat can help you feel good and stay on track. The key? Plan the splurge, don’t let it snowball.

Next Steps

Your tax refund is a chance to realign your financial goals, reduce stress, and build a little momentum toward your bigger picture. You don’t have to do just one thing with it—split it up, make a plan, and feel confident knowing you’re making your money work smarter.

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Thoughts? Questions? Leave ‘em in the comments below.

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