Tax season is here, and many of you will receive a refund. Statistics indicate that many people receive their refund and rush straight to a car dealer to make a down payment on a new or used car.  But before any decisions are made with this additional income, let’s remember God’s claim on all financial resources in Haggai 2:8, “The silver is mine, and the gold is mine, declares the Lord of hosts.” So even with these funds that are not ordinary income, we must prayerfully consider how God would have us manage His resources.

Here are a few ideas to consider before heading to the car lot that may help us to steward our finances better: 

1. Give.  

Consider viewing these additional funds as an opportunity to give toward a short-term mission trip at your church, your church’s debt-retirement fund, or other ministries, however the Lord may direct you. This will help develop the discipline of always giving God the firstfruits of our income and will also be a great encouragement to your church or student going on a short-term trip.

2. Establish or strengthen your savings.

If you haven’t established your $1,500 minor emergency fund (Money Milestone 2) or fully funded your 3-6 month major emergency fund (Money Milestone 5), now is a great time to accomplish this goal. The peace of mind from knowing you are prepared to cover unexpected expenses is priceless. 

3. Pay toward existing debt. 

Tax refunds are a great way to make progress in the debt snowball by paying off credit cards or making large payments toward existing car loans or student loans. If all of these are paid off, make an extra mortgage payment. Making one additional payment can knock off several months from a 30-year mortgage. Most mortgage companies make an amortization schedule available on your account, so run one before and after the payment to see the benefit.

4. Make additional IRA contributions. 

If you struggle to contribute 15% of your income to your retirement with your normal income, use all or part of your tax refund to help you reach that goal.  Make sure to check your annual IRA contribution limits based on your age and income.

5. Start a sinking fund. 

Do you have older appliances, car insurance coming due soon, or college tuition to plan for?  Use this opportunity to get a jump start on these funds so you don’t have to pull from savings when the expense arrives. These can crush your budget if you are not prepared for them.

6. Add to your car fund.  

Guess who else knows you have a tax refund?  Car dealers. Car dealers raise prices accordingly during tax season.  Save your refund and add to it over the next couple of months.  When prices come down this summer, pay for a better car with cash.

Finally, remember that receiving a large refund may indicate having too much tax withheld from your regular paycheck. Consider adjusting your payroll deductions so that you receive less of a refund. Yes, you will not have a large amount to spend once a year, but you will have more money to budget each pay period, which will help you to develop better budgeting discipline. This will also allow your money to be working for you throughout the year instead of for the government.

Hopefully, you are already making progress with the 8 Money Milestones, so many of these ideas will be familiar to you. But if we’re honest, we must admit that having a little “extra” can tempt us to splurge on something outside of our plan. That one decision can set us back several months if we do not remain disciplined. Wisely using a tax refund can give us the extra push to meet one or more Money Milestone and the satisfaction of meeting a financial goal.

About the author: Jeff Gordon serves as the Executive and Discipleship Pastor at Wake Cross Roads Baptist Church in Raleigh, NC. He also served as a missionary in Bangkok, Thailand for seven years. Prior to entering vocational ministry, Jeff worked in the banking world as an investment counselor. He holds a Bachelor’s degree from Liberty University, and M.Div and D.Min degrees from Southeastern Baptist Theological Seminary. Jeff and his wife, Jessica, have four children: Jackson, Sophia, Caroline, and Benjamin.