SUMMARY: Is your tax refund – or another bonus – burning a hole in your pocket? Before you spend it all, consider this advice. 

The average tax refund for 2025 was up 10.6% to $3,742, according to Internal Revenue Service filing data.* If you’re one of the folks getting a big windfall, you might be thinking about spending that check or putting a deposit on something fun. 

But splurging on a trip or a new piece of electronics may not be your best option, explains Lillian Zhang, a financial educator and author of The New Money Rules: The Gen Z Guide to Personal Finance.

“It can be tempting to treat it like ‘extra’ money,” she says. “But it's actually a great opportunity to strengthen your financial foundation.” She suggests applying the 50/30/20 budgeting rule to unexpected money like a tax return, so you can enjoy your money while making progress on your future goals:

•    Use 50% toward your future self by saving or investing.
•    Put 30% toward financial obligations like debt or upcoming expenses.
•    Use 20% on something fun. 

Where should the money go?

Deciding where to put that money depends largely on timing. 

Before doing anything, ask yourself when you might realistically need access to those funds. If you think you might need it within the year for a big purchase – such as a car or educational spending – consider a savings account or short-term share certificate. 

Savings accounts are best if you don’t know when you’ll need to withdraw it. An American Airlines Federal Credit Union savings account pays dividends** on every dollar deposited and your funds protected by the National Credit Union Share Insurance Fund. 

If you want to write checks on your cash, you can also put it into a Priority checking account, although the rates are much lower than if you simply stick with a share account. 

Make that money work.

If you have a goal in mind, but more runway to work with, share certificates – also called a certificate of deposit or CD – are another option. These accounts usually feature Annual Percentage Yields that are double traditional savings or share accounts. The hitch, though, is that you need to commit to a longer term. The Credit Union’s share certificates start at six-month terms going up to 60 months and require at least a $1,000 deposit to open. Another option, the Dream Plan Share Certificate, requires a $25 initial deposit and a commitment to deposit at least $25 each month. Check out our rates and fees.

Take it slow.

The good news? You don’t have to rush the decision. 

“The biggest mistake is people treating it like free spending money and YOLO-ing their earnings away without a plan,” Zhang says. 

Windfalls can accelerate your financial progress, whether you’re doing any of the following: 

•    Building an emergency fund.
•    Knocking out high-interest debt.
•    Jump-starting an investment account.
•    Achieving other financial goals. 

“It's perfectly OK to park the money in a savings account for a few weeks while you think through your plan,” she says.

Zhang suggests looking at your entire financial picture – your age, what you’ve already got saved and what specific money goals you have going forward. Don’t hesitate to get an assist if you don’t know where to start. The certified counselors with Credit Union’s Financial Wellness Department provide personalized guidance on budgeting, debt management and credit repair. They can also help you set a clear picture on whether you can afford a small treat with that refund.

*IRS filing season statistics for week ending Feb. 27, 2026
**The dividend rate is declared by the Board of Directors each month and paid on the first day of the month.