What are you planning to do with your tax refund?

Pay off debt?

Save it all?

Or spend it and hope you don’t regret it later?

Every year around tax season, I hear the same question from a lot of you:

“Steve, what’s the right thing to do with my tax refund?”

So let’s slow this down and talk about it—without guilt, without shame, and without pretending that money decisions are purely logical.

First, let’s clear something up

A tax refund is not free money.

When you get a refund, it simply means you paid more in taxes than you needed to throughout the year. Filing your return is how you tell the IRS, “Here’s my real situation,” and they send back the difference.

In other words, you’re getting your own money back.

Now here’s the tricky part:

Because it shows up as a lump sum, it feels different.

And when money feels different, people tend to make emotional decisions.

That’s where a plan matters.

The mistake most people make with tax refunds

They do one of two things:

1. They blow all of it and feel good for about a week
2. They do the “responsible thing” and put all of it toward debt or savings… and feel miserable

Neither of those builds long-term financial habits.

What actually works is balance.

The Financial Dad Refund Rule (simple and realistic)

If you’re paying down bad debt (like credit cards):

• 50% → Debt
• 25% → Savings
• 25% → Enjoyment

If you’re not in debt:

• 50% → Savings
• 50% → Enjoyment

That’s it.

Not extreme.

Not boring.

And not designed to make you quit after one good decision.

Why enjoyment matters (yes, really)

If every dollar you get goes only to discipline, eventually you’ll ask:

“What’s the point of all this?”

Good financial habits require both responsibility and joy.

Enjoyment doesn’t mean blowing money recklessly.

It means intentionally acknowledging:

• You worked hard
• You showed discipline
• You deserve to feel progress in your life

That might be:

• A small family trip
• Something you’ve been putting off buying
• An experience you’ll actually remember

When enjoyment is planned, it stops sabotaging your future.

Final thought

A tax refund won’t change your life by itself.

But how you handle it reveals the kind of financial habits you’re building.

And habits—not one-time wins—are what create real financial stability.

👉 Watch the full video on YouTube where I walk through this step by step