By Koach
March 7, 2018 // 6 min read

Four Great Ways to Use Your Tax Refund

It’s tax-refund season, and we know what many of you might be thinking, ‘Treat Yoself’. As soon as that refund hits the bank, it’s time to buy a new flat screen, buy your tickets for an exotic vacation, or get yourself a new wardrobe. We want to help change your thought process from “what should I buy first” to “how can I create a better financial future”. Here are some great ways we recommend using your tax refund to build financial stability!


If you’re like the majority of people out there, saving might seem overrated and your credit card may be your guardian angel. If you currently have less than $1,000 in savings, we recommend saving as much of your refund as possible to get you above $1,000. Establishing good savings habits will give you peace of mind if any unexpected expenses come up, and it is the first step towards creating a better financial future. If you want more specific advice on how to use your newfound wealth as a tool for the future, schedule a FREE 30 minute, one-on-one advising session with a financial koach!

Pay Off Debts

You may be tempted to use your entire refund to get rid of some debt, but only, yes ONLY, if your emergency savings account is above $1,000. Why? Because savings will prevent you from having to go further into debt. Let’s walk you through an example. You decide to use your entire tax refund to pay off a credit card and it feels great! Then the starter on your car unexpectedly goes out. Sound familiar? How are you going to pay for the repair? Well, you didn’t save anything from your refund so you have no choice but to put that expense on the credit card, going back into debt. You see, if you don’t prioritize savings over debt, you’ll have a really hard time escaping the debt cycle. It just never ends. If this doesn’t make sense, or you want to better understand why you must save before paying off debt, set up a FREE 30min koaching session with us!

Ok, you get it, the first thing you need to do is save. Once you have saved at least $1,000 for emergencies, then you can start to apply your refund to your debts. There are two primary strategies when it comes to paying off debts, and we don’t really care which one you choose as long as you pick one and stick to it!

The first strategy is to pay off the smallest balances first. This can help simplify your financial life by reducing the number of bills you have to pay each month. This method will also allow you to begin “snowballing” your debt payments by simply taking the monthly payment from your paid off debt and rolling it into your next largest debt payment. Not surprisingly, this method is known as the “debt snowball” because you start small and keep rolling your debt payments until all your debts are gone. This strategy is great because it can help you build momentum and confidence.

The second strategy is to pay off your debts based on the interest rate, where the highest interest rate debts get paid off first. This strategy is known as the “debt avalanche” because you are paying off your debts from the highest interest rate to the lowest interest rate, which will actually save you more money on interest than the debt snowball method. Use your koach account to organize your debts and track your progress!

We understand each financial situation and each individual is different. If you’re not sure how much of your refund you should save or which debt reduction strategy you should use, schedule a FREE appointment with a financial koach to ensure you are making the right decision. Get out of the debt cycle, get koached!


Building up your savings and paying off your debts are both extremely important, but have you considered giving as part of your tax refund strategy? We wholeheartedly believe that giving is one of the best ways to use money. Giving can brighten others’ lives as well as your own, and it can make a true difference in our world. We highly recommend you consider giving a portion of your tax refund to a cause or organization that is important to you. If your entire refund went to savings or getting rid of debt, we understand. Don't forget there is more to giving than just money. You can also give of your time. Giving some of your time to a local church, charity, or organization to better your community is a great way to make a big impact! Pick a cause that is important to you and make a difference in the world, whether that be with your time and/or money!


Treat yoself! This is typically the first thing that comes to mind when the tax refund hits your bank account. We realize you may have been “planning” on using your refund for some type of purchase, whatever that may be. Although we recommend using your refund to create some financial stability, we also recognize giving up on your purchase plans can be hard. The key isn’t to either make a big purchase or save, but rather create a plan that balances how to use your refund between savings, debt, giving, and purchases. If you fail to find a good balance, you’ll likely burn out and give up on trying to improve your financial situation. Maybe you don’t have to give up on making a purchase with your refund, simply make a smaller purchase in order to build up some savings and payoff your debts. Striking a balance is the key. If you need help balancing your different priorities, we would be happy to help you create a plan that works best for you because your situation is unique and it deserves a unique solution.

We truly hope this post will help you take the first step towards financial success. The easiest way to stay on track is to use the koach web app. The koach web app is a FREE financial planning tool that comes with unlimited access to on demand financial tutorials. Koach is a non-profit, so our goal isn’t to make a quick buck off of you, but to truly help you take control of your finances, because we believe in you! Sign up for an account today!