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Hello Reader,

Today's question is from "Alyssa age 31”:

Alyssa, we're glad to hear you're getting a refund — and bravo for planning ahead. With a little direction, you can make your money work for you.

When it comes to choosing between saving, paying off debt, and investing, you can do all three depending on your situation.

Here's what we suggest.

Pause before you spend

Sometimes when we get extra money, it can feel like it's burning a hole in our pockets. That excitement can lead to spending right away. However, when we wait before spending, we can be more intentional about where we put our money.​

Here's how to pause. If you're getting a physical check, save it somewhere safe and wait to cash it. If you're getting a direct deposit, once it hits your account, move it into a savings account separate from your checking account. This way, you won't be tempted to spend it right away.

A waiting period gives you time to consider how you want to use your money. Wait 24 hours or a few days — you decide what you're comfortable with.

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Split it strategically

If your refund is large enough, consider splitting it based on urgency and enjoyment — for example, between savings, debt repayment, and a personal treat. The key is to put more money toward the area that needs the most attention.

For example, if your goal is to pay down debt this year, consider putting 60% of your refund towards debt, 20% to savings to have a safe cushion, and 20% for yourself.

If nothing is urgent, divide your refund equally between the areas you're prioritizing.

Cover your basics first

When it comes to putting money towards your savings, start with your emergency fund; money set aside for things like car repairs, a broken pipe, or an emergency flight.

If you've already started your emergency fund, consider adding to it for a small boost. Remember, you can't control what the future might bring, but you can always prepare your finances to weather the storm.

Tackle high-interest debt

Consider putting money toward your highest-interest debt; specifically any with double-digit interest rates. Credit card interest can eat away at your payments and make you feel like you're not making progress.

Paying off, or nearly paying off, that debt will save you money in the long run.

If you don't have any high-interest debt, consider putting money toward the credit card with the lowest balance. See if you can pay it off entirely and free yourself from future payments.

Invest for your future

If you want to invest but don't know where to start, one of the simplest ways is to contribute to your retirement via your employer or an Individual Retirement Account (IRA).

You can also contribute to an interest-bearing account, like a high-yield savings account, to earn interest on your deposits.

Plan for upcoming expenses

Another option is to set money aside for planned expenses; travel, insurance, school, or a wedding.

Throughout the year, events like trips, birthdays, and parties can sneak up on us. Setting money aside now makes those moments more affordable and less stressful.

Use it to reduce financial stress

With the previous options, you still might feel a little unsure as to what to do with your money. If so, ask yourself one important question: What would give me the most peace of mind right now?

If you're worried about the future, put your refund toward savings. If debt has been keeping you up at night, then use your refund to pay down or pay off your debt.

Putting your money toward what brings you peace of mind is always the right move.

Do one thing just for you

Now that we've covered the responsible stuff, remember it's okay to spend a portion of your refund on yourself.

What's one thing that would make you feel good? Maybe getting your nails done, buying a few books, or having a spa day.

There's nothing wrong with a little guilt-free spending when done responsibly.

A few more things to consider

By now, we hope you have a clearer idea of what you can do with your refund check. Here are a few more things to keep in mind.

Avoid lifestyle creep

It's easy to treat your refund like extra money, but it isn't. It's simply the surplus of taxes you already paid. When you recognize that your refund is just your money coming back, you can be more intentional with it.

​Avoid purchases that raise your cost of living, like new expensive subscription services or appliances that increase your electricity bill.

Also, try to keep your spending habits the same. Your refund is a one-time payment, not a raise.

Make it part of a bigger plan

Deciding how to use your refund check is a great opportunity to check in with yourself. Take this time to review your financial goals. You can set new intentions for the second part of the year. Use this time to focus on your financial future.

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No matter how you choose to use your refund, we know you'll choose wisely. Making moves to strengthen your financial foundation is one of the best things you can do for yourself — now and in the future.

Remember if you need help with paying off debt, you can check out our completely free course on creating a debt repayment strategy. ​

You can also schedule a free mentor call at any time as a member of our course platform.

Be sure to check out our Clever Girl Finance course community and our Instagram channel.​

If you’re looking for more specific accountability, working with a Clever Girl Finance coach or mentor can also be a great option.

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📺 On YouTube

Check out this YouTube video on How to save more money by reducing your taxable income! ​

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Tune into the Clever Girl Finance YouTube channel for more great videos!

📖 On the blog

• ​10% Rule: Is saving 10% enough?​
• ​32 Fun challenges to do at home instead of going out​
• ​100 Day challenge ideas: 11 Ideas to reach your goals​​

🎧 On the podcast

• ​3 Easy ways to start investing—without the stock market​

Talk soon ❤️
Team CGF

(Kiersten & Bola)

P.S. Don't forget — we have 30+ free courses and 40+ free worksheets waiting for you, plus 1-on-1 coaching if you want personalized support.

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