By ASH IDRISY
CENTRE COUNTY — It’s been a month since Tax Day, and you probably don’t want to think about it again for another year, but now comes the fun part: the refund! Whether you’ve already made plans for how to spend it or not, here are some ideas to make the most of your tax refund.
Start with the classic 50-30-20 ruleforhow to divide up your paycheck. It says you should put 50% toward needs, these are groceries, rent and utilities. Then apply 30% toward wants, dining out, sports tickets and other leisure activities. Finally, with the last 20%, you want to pay down debt and save.One thing you can do is think of your refund as a bonus paycheck and apply this model to give your budget some breathing room — especially if you’re living paycheck to paycheck. Who knew there were 13 paydays in a year?
If you have more wiggle room in your monthly budget, consider flipping the classic rule. That is, you take 50% and put it toward savings. Prioritize debt repayments, short-term and then long-term savings like retirement. Next, take 30% and apply it to wants that are coming up right around the corner. Perhaps it’s a Fourth of July trip, or summer camp for the kids. Finally, keep 20% for practical needs, such as restocking on essential food items, setting aside money for next year’s taxes or tackling car repairs.
These are just guidelines, so you don’t have to follow them exactly. For instance, when paying down debt, the traditional advice is to start with high interest loans first. These would be your credit cards, followed by car loans and student loans. However, student loans are rarely dischargeable, even in bankruptcy, so you may choose to pay those off first.
Now, what if you didn’t get a refund? If you broke even that’s actually ideal. It means you withheld just the right amount and did not give the government an interest-free loan. Still, if you owed money or your refund was smaller than expected, review your tax withholdings and possibly talk to your human resources department and consider hiring a tax expert for next year. Lastly, don’t wait until April 14, 2026, to think about deductions. Start looking into them now. For example, you can shave money from your PA tax bill by making contributions to your kids’ 529 account.
Time to be real, money isn’t just math, it’s emotional. Most people like getting a refund. In a way, it’s forced savings, and they aren’t thinking about it like a zero-interest loan to the government. A refund can feel like a windfall or lifeline when times are tough. Even if technically it’s just the IRS returning your overpayment. Just make sure to take that emotional boost and use it wisely: save what you can, plan for next year’s taxes and don’t be shy about giving yourself a treat. It’s okay to enjoy your money, just do it with intention and a budget.
