5 strategies for getting the most out of your tax refund or bonus

Getting that extra check is exciting and there are endless possibilities for how to use it. With a little smart planning, you can maximize the impact and make big progress toward your financial goals.

When you get a big influx of funds through a tax refund or an annual bonus at your job, it can feel like you’ve hit the jackpot, and you may feel the temptation to spend it on a big splurge. But if you use some smart financial strategies with those funds, that bonus or refund can pack an even bigger punch and set you on the path to help you reach your financial goals.  

Here are some simple tactics you can use to put your windfall to work for you.

Save for a big goal

When deciding what to do with your tax return or bonus  money, consider setting it aside in a savings account to put toward a long-term goal. Though it may be tempting to spend it on something fun like a vacation or new gadget, making meaningful progress toward a bigger long-term goal can bring you a sense of joy too.

Particularly for longer-term goals where the total dollar amount is on the larger side or if your goal is still a few years away, like a down payment on a mortgage or a big event like a wedding. You can maximize your progress toward these goals by putting the funds into savings products that are more likely to offer higher interest rates, like a certificate of deposit (commonly known as a CD) or a money market savings account.  

Higher interest rates can really supercharge your bonus or tax refund by adding even more to it than you started with.

Start your emergency fund

Here’s one universal truth about managing your finances: You should expect the unexpected

Unplanned expenses are bound to happen. They seem to come up at the most inopportune times, and they tend to come with some hefty price tags: a fender bender in the grocery store parking lot, a mishap at your kid’s soccer game that led to a trip to the ER, a bored puppy that ate your couch cushions. Those surprise expenses can really derail your budget, or they might lead you to rely on tapping into credit that you didn’t plan to use. 

That’s why having an emergency fund can be one of the best ways to keep your financial goals on the right track.

If you don’t already have some emergency savings built up, a tax refund or bonus can give you a nice boost to get one started. And even better – when you put that refund or bonus into a savings account, you can earn interest on it, helping it grow even more over time.

Pay off debt

Using your tax refund or bonus money to pay off debt can also be a smart way to use that extra income.

Whether you’ve got credit card debt that has accrued over time, or you’re looking to pay off your student loans, putting your tax refund or bonus money toward those debts can give you a big jump-start on achieving those goals.

In the long term, you’ll save even more by not having to pay as much interest on that debt, and you’ll also free up some your monthly budget in the future as those monthly payments disappear.

Boost your retirement account

Your employer may allow you to contribute part (or all) of your bonus to your 401(k) directly from your paycheck. There are annual contribution limits to 401(k)s and other types of retirement accounts, so using your windfall to put toward that retirement savings can help you max out your contributions without feeling the impact as much in your day-to-day budget.

The more you contribute to your retirement accounts earlier in life, the more you’ll be able to experience the power of compounding by the time you’re ready to retire.

Treat yourself (thoughtfully)

Of course, there’s nothing wrong with spending part of your tax refund or bonus check – after all, it’s your money and you earned it! While it may not be advised to blow your entire windfall on large or impulse purchases, you may want to spend at least a portion of it on something that’s more of a “want” than a “need,” especially if you’ve been able to put some of it toward your long-term financial goals.  

Let’s face it: experiencing a little immediate gratification just might give you the psychological boost you need to stay on the right track when it comes to sticking to those long-term goals.

If you do use some of your tax refund or bonus money to buy something fun, think about spending it on something that could have some long-term financial benefit. For example: If you invest in a high-quality piece of clothing that’s timeless and durable, that can save you money in the long term because you won’t need to replace it as often over time.

The key here, if you do decide to spend part of your bonus or tax refund, is to be thoughtful and strategic about your purchase. Don’t just make a purchase on a whim.

Get inspired to save! Learn how one woman managed to save $10,000 in just one year. 

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Co-signing 101: Applying for a loan with co-borrower

Practical money skills and financial tips for college students

How to build credit as a student

5 things to know before accepting a first job offer

Learn to spot and protect yourself from common student scams

How I did it: Paid off student loans

Bank Notes: College cost comparison

Four ways to make a strong resume for your first real job

Tips to earn that A+ in back-to-school savings

7 ways to teach your children to be scam-savvy

How to prevent fraud

Outsmart tax scams and keep your finances safe

Lessons learned from experiencing a scam

Keep your finances safe and secure: Essential tips for preventing check fraud

How to avoid student loan scams

Protecting elderly parents’ finances: 6 steps to follow when managing their money

Banking basics: Avoiding fraud and scams

How to spot an online scam

Money muling 101: Recognizing and avoiding this increasingly common scam

What you need to know about identity theft

What is financial fraud?

5 tips for seniors to stay a step ahead of schemers

Recognize. React. Report. Don't fall victim to financial exploitation

Webinar: U.S. Bank asks: Are you safe from fraud?

Is online banking safe?

How-to guide: What to do if your identity is stolen

How you can prevent identity theft

8 tips and tricks for creating and remembering your PIN

Helping Gen Z build financial confidence

Short- and Long-Term Financial Goals for Every Life Stage

How your taxes can change after a major life event

What to do with your tax refund or bonus

Financial goals for 2024 a 12-month planning guide

How to save for a dream vacation

Tips for talking about money when friends earn more

Pros and cons of a personal line credit

3 tips for saving money when moving to a new home

What is a Certificate of Deposit? And what to know before opening an account

What does FDIC mean?  

3 financial tools to help automate your finances

5 tips for creating (and sticking to) a holiday budget

Financial checklist: Preparing for military deployment

How to financially prepare for a military PCS

Planning self-care moments that matter (and how to finance them)

Growing your savings by going on a ‘money hunt’

Working with an accountability partner can help you reach your goals

The banking app you need as a new parent

Why a mobile banking app is a ‘must have’ for your next vacation

How to decide when to shop local and when to shop online

Your guide to starting a job: Resources to help along the way

How to set yourself up for success in your first job

5 myths about emergency funds

Financial Wellness Assessment

Does your savings plan match your lifestyle?

Mobile banking tips for smarter and safer online banking

Uncover the cost: Wedding

Uncover the cost: International trip

Are savings bonds still a thing?

Tips to overcome three common savings hurdles

Adulting 101: How to make a budget plan

Personal loans first-timer's guide: 7 questions to ask

Mindset Matters: How to practice mindful spending

How and when to ask for a raise

How to choose the right rewards credit card for you

How can I help my student manage money?

How to manage money in the military: A veteran weighs in

Things to know about the Servicemembers Civil Relief Act

You can take these 18 budgeting tips straight to the bank

3 tips for saving money easily

Save time and money with automatic bill pay

How to best handle unexpected expenses

Stay on budget — and on the go — with a mobile banking app

Do you and your fiancé have compatible financial goals?

U.S. Bank asks: Transitioning out of college life? What’s next?

U.S. Bank asks: Do you know your finances?

U.S. Bank asks: Do you know what an overdraft is?

Personal finance for teens can empower your child

How to save for a wedding

How can you pay bills online the right way?

How compound interest works

Dear Money Mentor: How do I set and track financial goals?

Lost job finance tips: What to do when you lose your job

Money Moments: 3 smart financial strategies when caring for aging parents

Money management guide to financial independence

First-timer’s guide to savings account alternatives

7 financial questions to consider when changing jobs

5 tips to use your credit card wisely and steer clear of debt

Money Moments: 3 tips for planning an extended leave of absence

Overdrafts happen: Steps to get you back on track

P2P payments make it easier to split the tab

Essential financial resources and protections for military families

How to stop living paycheck to paycheck post-pay increase

Practical money tips we've learned from our dads

6 ways to spring clean your finances and save money year-round

How to cut mindless spending: real tips from real people

How to increase your savings

Bank from home with these digital features

Military finance: How to create a family budget after military service

Discovering your money personality can help you save

Tips on how couples can learn to agree about money

Understanding your military GI Bill benefits

How grandparents can contribute to college funds instead of buying gifts

How to open and invest in a 529 plan

Using 529 plans for K-12 tuition

Is a home equity loan for college the right choice for your student

Parent checklist: Preparing for college

How to apply for federal student aid through the FAFSA

What to consider before taking out a student loan

Are you ready to restart your federal student loan payments?

Consolidating debts: Pros and cons to keep in mind

Managing debt

Best travel credit card perks for family vacations

5 tips to use your credit card wisely and steer clear of debt

5 steps to selecting your first credit card

How to use debt to build wealth

What’s a subordination agreement, and why does it matter?

Understanding the true cost of borrowing: What is amortization, and why does it matter?

Know your debt-to-income ratio

How to pay off credit card debt

Your quick guide to loans and obtaining credit

Dear Money Mentor: How do I begin paying off credit card debt?

Checklist: 10 things to look for when touring a home

How to sell and buy a home at the same time

Dear Money Mentor: What is cash-out refinancing and is it right for you?

Home improvements with the best ROI

How we did it: Converted to solar power

PCS moving checklist for military spouses and families

Crypto + Homebuying: Impacts on the real estate market

How I did it: Bought my dream home using equity

House Hacks: How buying an investment property worked as my first home

Managing the impacts of appraisal gaps in a hot housing market

Spring cleaning checklist for your home: 5 budget-boosting tasks

Saving for a down payment: Where should I keep my money?

Your guide to breaking the rental cycle

Checklist: 6 to-dos for after a move

What are conforming loan limits and why are they increasing

Uncover the cost: Building a home

The lowdown on 6 myths about buying a home

4 ways to free up your budget (and your life) with a smaller home

Get more home for your money with these tips

Money Moments: How to finance a home addition

First-time homebuyer’s guide to getting a mortgage

Dear Money Mentor: When should I refinance a mortgage?

Beyond the mortgage: Other costs for homeowners

10 questions to ask when hiring a contractor

What is an escrow account? Do I have one?

These small home improvement projects offer big returns on investment

Should you get a home equity loan or a home equity line of credit?

Mortgage basics: What’s the difference between interest rate and annual percentage rate?

Is a home equity line of credit (HELOC) right for you?

How to use your home equity to finance home improvements

How does a home equity line of credit (HELOC) work?

How do I prequalify for a mortgage?

Home equity: Small ways to improve the value of your home

Can you take advantage of the dead equity in your home?

4 questions to ask before you buy an investment property

10 uses for a home equity loan

Improving your credit score: Truth and myths revealed

How to spot a credit repair scam

6 essential credit report terms to know

5 unique ways to take your credit card benefits further

How to maximize your credit card rewards

Test your loan savvy

Decoding credit: Understanding the 5 C’s

Should you give your child a college credit card?

U.S. Bank asks: What do you know about credit?

What types of credit scores qualify for a mortgage?

What is a good credit score?

Credit score help: Repairing a bad credit score

How to improve your credit score

Common questions about electric vehicles (EVs)

What to keep in mind when buying a used car from a private seller

How I decided that buying an RV was worth it for me

Take the stress out of buying your teen a car

Questions to ask before buying a car

How to choose the best car loan for you

Disclosures

Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.