8 Ways Suze Orman Wants You To Use Your Tax Refund

If you have a tax refund coming your way, the windfall might put some much-needed wind into your financial sails. Although it might be tempting to splurge on a fun purchase, putting your tax refund to good use can help you move the needle financially without earning extra income.

Suze Orman's advice might come in handy for taxpayers looking for a blueprint to make the most of their tax refund. Below, explore the top ways to use your tax refund efficiently, according to Orman.

If you have high-interest debt, it can act like a drain on your financial resources. While credit cards are typically the worst offenders in terms of a high interest rate, other high-interest loans can hold you back too.

You can tackle your debts when you receive a windfall, including a tax refund. If possible, use your refund to eliminate your high-interest debt. Even if you can't wipe the slate clean, piling your refund into the debt will help you pay it off ahead of schedule and potentially lock in significant savings on interest charges.

Most financial experts, including Orman, recommend having an emergency fund of three to six months' worth of living expenses stashed in an accessible location. For example, if you spend $2,000 per month, your emergency fund might hold between $6,000 and $12,000.

If you haven't built up an emergency fund yet, consider using your tax refund to start one or top it off.

When possible, don't fall into the temptation of tapping into your emergency funds for non-emergency costs. It's OK to lean on these savings to cover unexpected expenses, like a medical issue, car accident, or stint of unemployment — but using them to cover the purchase of a sale item doesn't count as an emergency.

If you have no high-interest debt and a healthy savings account, beefing up your retirement savings is worthwhile. You can use the refund to invest in your IRA or 401(k). Ideally, your funds will grow over the long term to help you cover retirement costs.

When you receive a windfall, it is often tempting to use the funds for an impulse purchase or luxury item. But Orman advises against using the refund for a splurge. Instead, make it a priority to use the funds to build a brighter financial future.

If you're already financially stable, Orman suggests putting your refund into a brokerage account to grow wealth through smart investments.

Generally, a taxable brokerage account offers a good complement to your retirement investment accounts. By investing across these accounts, you can build a financially bright retirement.

If you are nearing retirement and plan to stay in your home, Orman suggests using your tax refund to make headway on paying off your mortgage ahead of schedule. Although a tax refund is unlikely to eliminate your mortgage balance, it can help you make progress. After all, every little bit helps.

Remember that paying your mortgage early doesn't always make sense for everyone. For example, stretching out your repayment could benefit you financially if you've locked in a low interest rate. But if you just want to get this ongoing payment out of your life, paying off your mortgage ahead of schedule can feel amazing.

As a homeowner, you likely know that most homes come with problems. At some point, you'll need to handle maintenance and repairs on essential home items, like an HVAC.

Using your windfall to handle some basic home maintenance, like an AC tuneup, could be a great use of the funds.

Building your skills might increase your earning potential, transforming your financial situation. If you want to beef up your skills, consider using the refund to cover a class or career coach.

Although a tax refund can put some wind in your sails, finding yourself in tax debt can quickly take the wind out of your sails. Of course, tax debt isn't ideal. But luckily, it's possible to crush your tax debt and move forward with your life.