“Tax returns: $1,200.00

  Me: put 4 eggs in my omelette”

Tax return season is here and like each year, we see those memes floating all around the internet and social media.

Tax return is always an exciting season for many, finally getting back from the government some of well deserved money after working all year long.

However, we should be mindful and intentional about how we spend our tax return money and what to spend it on.

Today, I will be giving you top 7 ways to really put your tax return money to good use in 2025 and avoid frugality.

1- Pay off some debt

The first path to financial freedom is making sure you are free of debts.

Whether it is credit card loans, personal or student loans. You should put some (not all) of your extra money to paying off some debts.

Paying off debts can be really really hard because as they say, paying off debt is a self-fulfilling prophecy. It brings so much money stress and anxiety around your finances. The reason why is because no matter how much money you can have at a specific time, until you are debt free, you will never feel free. Your money can never truly be yours because you will be using every cent to pay what you already owe.

Many people live life ignoring their debts (the big picture) and you cannot tackle what you do not embrace. Here is how you can use your tax return money towards paying off debt in 2025:

1. The first step is embracing the fact that you are in debt, write down in categories exactly how much money you owe.
2.  Next, tally up each separate debt. 3)
3. Then, identify which is the most important to pay and determine what percentage of your tax return you are willing to put in there to make a difference!

Will it be 5%, 10%, 20% or even 50%? The choice is yours!

2- Build or enhance an emergency funds

Life happens and emergencies happen all the time. That is the reason why it is important to keep separate funds for the uncertainties of life. Whether it is a sudden medical bill, an unexpected laptop replacement, or even a loss of income.

Having an emergency fund (different from a savings fund), is a way of protecting yourself when sudden things happen. Sudden unexpected expenses can be very upsetting. Since you did not know they were coming, therefore, you have not prepared for them. So, how much should go towards your emergency fund? 

First, think about all the emergencies you have had in the past, what were they about and how much they cost? 

Personally, in the recent past, some of the emergencies I have had involved needing to replace my macbook (the less pricey models cost around $800.00). Or needing to help a really sick family member living in a country where job opportunities are lacking (around $1,000.00). 

How much you need depends on you and your needs! 

Besides the financial aspect, having an emergency fund is a great mental health care measure. As it can alleviate the upsetness and help approach unanticipated finance situations with a calmer head, heart, and mindset!

3 – Building or enhancing a life savings funds

So, we have discussed an emergency fund, that is there just in case of emergency and unexpected expenses. Now, let’s discuss a fundamental survival hack, that is to have a life savings fund. 

Having a life savings is really important because let’s say you suddenly lose your source of income, whether your business or your job, it will take some time to either get the business back on its feet or score another job. That’s where your life savings come in! As a general rule, experts say you should have 6 months of life expenses in your life savings account. I will have to go further and say you need 12 months of savings, yes 1 year! The job market is rough nowadays and you might need more time. Especially if the circumstances around losing your job or business were hard mentally (experiencing a burnout for example). As you need some rest before starting to look for another job)! 

To build a life savings fund you need to first determine what are your monthly recurring expenses:

(for example: rent, gym, utility, light bills, grocery bills, gas, etc;), tally all of that up and multiply by 12.

To illustrate this, let’s say your monthly expenses are:

Rent: $700.00 ; Telephone: $32.00 ; Utilities: $119.00 ; Gym: $30.00 ; Groceries: $250.00 ; Body care: $50.00 

Then that’s a total of $1,181.00 and for a 6 month life savings you need $7,086.00. And for a year (12 mo) you need double that amount – $14,172.00

Setting aside one month equivalent from your tax return money to your life savings can make a big difference!

4- Invest in yourself

Education is a great way to invest in yourself and your future. Taking a new course can help you stay relevant in your career field. It can also give you the tools needed to start your own business and become your own boss. 

Staying educated is very important and it is not only about the knowledge you will acquire. You should pick a subject or a matter that will have high future returns. 

A new course should be chosen wisely, something that can help you make more money or help you get a better job with better benefits. 

There are also a lot of surprising other benefits around acquiring more knowledge in your field. It can bring new networking opportunities and help you become more confident in the workplace.

Acquiring new knowledge gives you new skills and abilities which makes you approach day to day work situations with much more confidence and self-esteem.

Taking a new course requires a lot of time, dedication and needs a goal-oriented attitude, all of which will arm you with soft skills needed to excel at work or in a business.

If you have always had a course that you always wanted to enroll in, now with the extra tax return money, you can allow yourself that luxury!

5- Donate to a good cause

What goes around comes back around… this is not only a saying or just some lyrics to a Beyonce song. It is also the truth around money!

Donating money comes with a lot of benefits. It is a major mood-enhancer and can bring you a lot of happiness.

Donating money to a friend in need or to charities leaves you feeling so good about yourself. It is a privilege to have more than enough that we can share with others. It strengthens our personal values and to some of us, giving back is a moral duty. We live this life together and we co-exist simultaneously and feeding a hungry child or helping shelter a homeless person is an opportunity that we should embrace with huge smiles and open hearts. 

However, you should be very careful about how much you donate and to which cause.

I do not recommend giving away all your tax return money or a huge chunk of it, but rather a reasonable amount.

I also do not recommend giving away money to a cousin that uses money towards addiction or one who never wanted to get a job. Your hard earned money should go towards people who have earned your respect, not those who choose to be mediocre.

Research charities that centers around children in need, medical causes like a foundation for cancer treatment, or homelessness.

Life knows when you share and will always give you more than you need so you have enough to share!

7 – Treat yourself!

You deserve to pour in yourself, and sometimes that can look like allowing yourself the little pleasures of life ! 

You have been working all year long and you should reward yourself in any way you see fit without any guilt.

Feeling guilty about spending money on non-essentials is having a scarcity mindset, however, to build and maintain wealth, you need an abundance mindset.

The best way to manage money is to release any guilt related to it and feel good about spending. Treating yourself well sends the right signals to your subconscious mind and can open many doors and limitless opportunities for you to gain more money. Besides rent, groceries and other expenses, you are a human being with wants that go beyond your main necessities. Part of loving, honoring and cherishing yourself is catering to all your needs!

Whether it is a new bag, a spa/massage day or getting your nails done – go treat yourself! Allowing yourself small pleasures can be a good way to really put your tax return money to good use in 2025!

Conclusion

We are at the end of this blog article around how to really put your tax return money to good use in 2025!

Having extra money like one-off a year money like tax return can make you wonder what to spend it on but spending it the right way like on paying off debts, emergency funds, life savings, education, charities and finally a little treat for yourself is the way to go!