money in wallet

I want you to know that financial experts are expecting your household to be a big boost for the economy this year. My hope is that you will be smart and not behave as expected without careful consideration.

Here’s what is going on: Economists are busy predicting that the average federal tax refund this year will be larger than people expect because of new tax rules that Congress passed last year.

By some estimates, the average refund of around $3,000 might rise by another $1,000 or more. And the assumption is that people will just spend that unexpected bump in their checking account.

I hope you prove them wrong.

I want you to use any tax refund as an opportunity to build financial security, not just buy things. That is advice I would always give, but it is extra important right now. The economy is doing okay, but there are signs of some stress. Job growth has slowed, and businesses are increasingly focused on how they can use artificial intelligence for jobs that previously required human staff.

If you find yourself with an unexpectedly large tax refund this year, please consider all the ways that money can be used to make you more financially secure:

  • Boost your emergency savings. Every dollar here gives you peace of mind and protection.
  • Pay down high-interest credit card debt. First, see if you qualify for a zero-rate balance transfer credit card offer, then attack that balance.
  • Spend on car maintenance. Avoiding costly repairs and extending the life of your current car means not having to deal with today’s insanely expensive new and used-car market.
  • Spend on home maintenance. It not only can mean avoiding bigger repair costs down the line, but it also keeps the value of your home stronger.
  • Boost your retirement savings. For 2026, the Roth IRA contribution limit has increased to $7,500 ($8,600 if you’re 50 or older).
  • Invest in work skills. If you are worried about job security, especially in a field where artificial intelligence is already being used, consider how to make your resume as up-to-date as possible. If your current employer doesn’t cover continuing education costs, look into online courses or community college classes to help polish your resume for our changing economy.

And if you do find yourself contemplating spending some of an unexpectedly large tax refund, I hope you will stop for a moment and ask yourself: “Is this a need, or a want?” If there is any part of your financial life that gnaws at you right now, the kindest and smartest move you can make today is to limit your spending—be it a tax refund or your regular income—on wants. What you need most, and what I want most for you, is financial peace of mind.

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    Categories: Budgeting, Credit & Debt, Credit Cards, Emergency Funds, Roth Accounts, Saving