Money·2 min read

Smart Ways to Spend Your Stimulus Check, Tax Refund, and Other Windfalls

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March 9, 2021

The Story 

Sometimes, life gives you lemons. (Psst...that's why emergency funds are a thing.) Sometimes, you get some money you weren't expecting.

Uh, how do I get more of that?

You might get a windfall in the form of a tax refund, a stimulus check, a bonus at work or some other cash gift. And while it's easy to get swept away by the added spending power, here's a better strategy: make a plan to use it wisely.

Got any suggestions?

If you need the cash to cover your regular bills or other immediate needs, start there. Some ideas for what to do after that:

  • Pay down high-interest debt. Like on your credit cards. Because a smaller balance = paying less in interest. Bonus: clearing away a big chunk of debt can give your credit score a nice boost.

  • Add to your emergency fund. Life comes at you fast. And having some money saved can take some pressure off a stressful situation. Experts say to aim for three to six months' worth of take-home pay. But if you’re starting from zero, it's okay to aim lower at first. Any little bit helps.

  • Save for a big goal. Maybe that's buying a house, starting a business or (finally) going on that post-pandemic luxury vacation.

  • Invest. For even bigger goals that are years away (like retirement), investing can help your money grow, grow, grow.

I'm still waiting for the "spend some" option.

You can do that. But try to limit yourself to spending just 10% to 20% of your windfall on something fun. And maybe only give yourself that reward after checking off a task on your financial to-do list. Like rolling over your 401(k) or checking your credit report. Treating yourself like this can help motivate you to stay on track financially.


Getting a windfall isn't an everyday kind of thing. So don't miss a chance to put extra cash to good use. Take some time to think about how you can improve your financial situation today and in the future.

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