Few things can brighten up a winter day like a tax refund. While we are only human and most of us want to splurge with our tax refund, careful money management for the majority of your refund is a very smart financial move.

Here are 8 smart ways to use this year’s tax refund:

  1. Pay Existing Debt

The average interest rate on new credit cards is just over 13%; many credit cards charge even higher rates.

Paying bits off your credit card will be one of the smartest money moves you make for your tax refund. Paying other debt, like a car loan, for instance, is a smart move too.

Just be sure your loan does not impose early payment penalties.

  1. Build An Emergency Fund

Ideally, three to six months’ worth of income should be stashed away in an emergency fund. However, if you cannot manage that much, any emergency fund is better than not having one. You need to have something to fall back.

Open an emergency account if you do not have one, and save at least some of your tax refund. You will be glad that you did, especially if the car breaks down or the air-con stops working.

  1. Invest

So, you’re in a good place financially with an emergency fund and little to no credit card debt. Maybe it is time to open a broker account and start investing with your tax refund. Online stockbrokers are affordable and efficient for small investors.

  1. Start a Savings Account for Something Big

If you want a great holiday in 2018, or have decided, it is time to get serious about saving up the deposit for a house, open an account just for these big expenses.

Keeping the money separate from your regular bank accounts makes money management for major purchases easier and means you are less likely to dip into it for splurges.

  1. Make Home Improvements

For under $1,000, you can make home improvements that will improve your daily quality of life. You could repaint one or more rooms, install new bathroom faucets, buy a programmable thermostat, add new landscaping, or de-junk and organise your garage or shed.

Increasing the value and enjoyment of your home is smart long-term money management exercise.

  1. Donate to Charity

Receiving your tax refund gives you an ideal opportunity to donate money to a cause that is close to yours or family’s heart. Make sure you save the receipts for any donations, so you have the proper documentation should you itemise your deductions next year.

One important aspect of good money management is sharing some of your wealth with those less fortunate.

  1. Replace an Inefficient Appliance

If you are still using an old refrigerator or washer-dryer combo that is energy inefficient, consider donating your old appliances to a charitable organisation and buying a replacement that is more eco friendly.

You will enjoy a new appliance, and your utility bills could be lower as a result. That is smart money management.

  1. Invest in Yourself

Perhaps you have wanted to take a college course or learn how to use Facebook Ads. Consider using some of your tax refund to make an investment in yourself. Learning a new skill that is relevant to your job could support your career and learning a new home based skill, like cooking or sewing, can lower bills and improve your quality of life.

If you have had your eye on a pair of shoes or a couple of console games for when your tax refund arrives, there is nothing wrong with a treat. However, beyond that, consider making your refund work for you and your family’s future through careful money management.