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How to responsibly spend your federal tax refund

Three out of four taxpayers will get a refund check averaging around $3,000, according to the IRS.

HUNTSVILLE, Ala. — Most working Americans view Federal Tax Refund Season as a time to splurge using a lump sum of money. 

Financial experts say spending your entire refund check on frivolous items that you wouldn't originally be able to afford is a big mistake.

"There's a lot of great ways to use a tax refund check," Financial expert and New York Times best-selling author Lynnette 'The Money Coach' Khalfani-Cox said. "You should absolutely knock off some credit card debt." 

People living paycheck to paycheck often have a hard time saving their money, and tax refund season is a good place to start. 

Khalfani-Cox created a document that organizes bills, to help the pay off process simpler.

Another way to capitalize off of your refund is by tucking the money away and saving it for a rainy day. Most Americans don't have a spare $400 in emergency savings, so this lump sum could help. 

RELATED: Yes, you have to pay taxes on the sale of NFTs

“One great resource to use is SpruceMoney.com, a new mobile banking app and savings account that makes it easy to save and better manage money, at tax time and all year long,” Khalfani-Cox said.

RELATED: Yes, you have to pay taxes on some CashApp, Venmo funds

People can download the free Spruce app to track their spending, create savings goals, and designate the amount of money from their tax refund they want to stash into savings. Although Spruce is from H&R Block, you don’t have to be an H&R Block client to use Spruce.

Most importantly, invest in yourself using your refund. Purchase a class or program that will help further your career. 

RELATED: Yes, 2021 unemployment benefits are taxable on this year’s federal returns

To find more tips from 'The Money Coach' find her on Facebook, and Twitter.

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