How to Spend Your Tax Refund Wisely (Real Advice for Single Moms)

Not Your Typical Financial Advice

If you’re a single mom, you’ve probably come across financial advice that tells you to put your entire tax refund toward debt or invest it all for the future. But let’s be real—many of us are just trying to cover basic needs and make life a little easier for ourselves and our kids.

This post isn’t about “ideal” personal finance advice—it’s about realistic, practical strategies that actually work when you’re raising a child on your own. This is what I do with my tax refund, and it has helped me manage my finances without feeling like I’m constantly struggling.

Of course, everyone’s situation is different, and how you use your tax refund will depend on how much you receive. But if you’re looking for a way to make your refund work for you, here’s what I recommend.

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1. Build a “Bill Buffer” Account

One of the best financial decisions I ever made was creating a separate checking account just for bills. Here’s how it works:

• I calculated my monthly bills (rent, utilities, insurance, etc.).
• Since I get paid biweekly, I divided that amount by two. Every payday, I transfer that amount into my bill account so that my monthly expenses are always covered.
• To make this system work, I first had to build up the account to cover a full month of expenses. I used my tax refund to do this. 

The year that I created this account, I used nearly my whole tax refund to fund the account, making sure that I had a whole month’s worth of expenses in the account. Now I don’t have to worry about when the bills are due or try to schedule bill due dates to line up with my paychecks. That is a hassle for me. This “Bill Account” is hassle-free.

This method gave me so much peace of mind. No more stressing about whether I had enough to cover a bill that was due before payday. Eight years later, I still use this system.

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2. Start (or Grow) an Emergency Fund

I won’t tell you to put your whole refund into savings, but I do recommend using some of it to start or build an emergency fund.

• Even if it’s just $100 to start, that’s better than nothing.
• I keep my emergency fund in a separate bank (a high-yield savings account) so I’m not tempted to dip into it.
• After starting it with my refund, I now add whatever I can from each paycheck—even if it’s just $25.

Having even a small emergency fund can prevent financial disasters down the road.

For more tips on How To Create An Emergency Fund or Budgeting, Check out these blog posts.

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3. Cover Annual Expenses in Advance

One of the smartest ways I use my tax refund is to pay for annual expenses upfront. Instead of scrambling when these bills come due, I already have the money set aside.

Here are some of the things I pay for with my refund:
✅ AAA membership
✅ Car registration & license fees
✅ Dog license renewal
✅ Zoo family membership
✅ Grammarly (for my blog and work)

We all know that annual expenses may catch you by surprise. We often forget when they are due. Or at least I know that I do. And when you live paycheck to paycheck, these annual expenses can be the reason your family has to eat Ramen and PBJ for a week or 2. By using my tax refund to pay for these annual expenses,  I avoid extra stress and last-minute budgeting struggles.

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4. Fund Kids’ Activities & Sports

If your child plays sports or participates in extracurricular activities, you know how expensive it can be. Instead of scrambling for money when registration fees are due, I set aside the money upfront with my tax refund.

For example, I know that my youngest son plays baseball and football, and my oldest is in Color Guard (which is more expensive than baseball and football combined). So I calculate how much that will cost and put that money into my “Events” account. This way, my son never has to miss out because I couldn’t afford it.

I know how it feels to be the kid who couldn’t participate in sports because money was tight, and I never want my son to experience that.

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5. Set Aside Money for Special Events

One of the best things I do with my tax refund is plan ahead for fun events throughout the year. As a kid, I did not get much if anything for my birthday or Christmas and always had to make my Halloween costume due to money. To make sure that my kids never have this issue, I put up money for these “Events”.

Here’s what I save for:

🎂 Kids’ birthdays – $200 each x 2 kids (so I don’t have to stress about gifts or a small party)

🎡 County fair – $200 (for tickets, rides, and snacks—because memories are worth it)

🍿 Popcorn festival – $200 (a fun annual event we always look forward to)

🎃 Halloween – $200 (costumes, candy, and any fun activities)

🎄 Christmas – $500 (gifts, decorations, and holiday fun)

🎒 Back-to-school shopping – $500 (new clothes, supplies, and any school fees)

Total: $2,000

By setting this money aside, I don’t have to worry about how I’ll afford birthdays, holidays, or fun family outings. This gives me so much peace of mind.

In the past, I had a separate savings account at my current bank. Now that I have a high-yield savings account, I will put the “Event money” (that’s what I call it) into my HYSA. This account is at a separate bank so I am less likely to dip into it, and it will earn more interest. The nice thing about Ally Bank is the “buckets” feature. So even though it will be in the same account as my Emergency Fund, It will be separate.

If you are interested in signing up for A high-yield savings account with an APY of 3.8%, I recommend Ally Bank. If you use my Referral Link, you can get $100 when you open an account and set recurring monthly payments! You will receive the money after your 3rd monthly automatic deposit. And I will get a $50 bonus. (Who’s getting the better deal here? lol) https://ally.com/referral?code=9J2P2V9H3R

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6. Treat Yourself (Within Reason)

As single moms, we’re always putting our kids first—making sure they have everything they need while often neglecting ourselves. But here’s the truth: you deserve something too. That’s why I always set aside a small amount of my tax refund to buy myself something nice.

This isn’t about splurging on luxury—it’s about acknowledging your hard work and sacrifices. It could be:

👠 A pair of shoes you’ve been eyeing but kept putting off
📚 A set of books to help you unwind or inspire personal growth
💆‍♀️ A massage or self-care treat to relieve stress
👕 A few new wardrobe pieces to make you feel confident
☕ A nice coffee maker, because let’s be honest, caffeine is a lifeline

It doesn’t have to be expensive—just something that brings you joy. Taking care of yourself isn’t selfish; it’s necessary to keep showing up as the amazing mom you are.

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7. Prioritize Debt—But Only If You Can

Once I’ve covered my bills, annual expenses, special events, and treated myself (within reason), I take a look at what’s left. If there’s extra, I put it toward my debt—but only if I can afford to.

I used to feel guilty if I didn’t use my refund to aggressively pay off debt, but over time, I’ve learned an important lesson: being financially stable is about more than just eliminating debt—it’s about making sure my present needs are met too.

Some years, I have a little left over, so I:
✔️ Make an extra payment on my highest-interest debt (credit cards first!)
✔️ Pay off a small balance in full for a quick win
✔️ Put a lump sum toward my car or personal loan

Other years, I have nothing left after covering necessities—and that’s completely okay. I refuse to drain my resources just to put a little dent in my debt. I’d rather have my bills paid, my child’s activities covered, and a small emergency cushion than throw everything at debt and end up struggling later.

If you can put extra toward debt, that’s great—but don’t feel guilty if you can’t. Stability and peace of mind come first.

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It’s About What Works for You

This isn’t the typical financial advice you’ll find online. It’s real, practical, and designed for single moms who are juggling financial responsibilities on their own.

If you get a tax refund, use it in a way that makes your life easier—not just in the short term, but for the months ahead. Setting up a bill buffer account, funding annual expenses, and planning ahead for kids’ activities has changed my financial life, and I hope it helps you too.

If this advice resonates with you, share it with another single mom who could use it! Let’s support each other on this journey.

If you have advice or tips or want to share how you spend your refund, share it in the comments. I’d love to hear it!😊

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