Suze Orman: Here’s what you should do with your tax refund

Suze Orman says this mental shift is the key to saving money

If you're in the group of Americans that's getting a tax refund, award-winning financial advisor Suze Orman has some ideas on how you can put it to good use.

Naturally, "once the money hits your bank account," it's tempting to spend on wants, not needs, the former CNBC host and best-selling author writes in a blog post. Instead, she writes, put at least a portion of those funds toward building financial security.

For example, "if you have unpaid credit card bills that charge you interest, writes Orman, "I want you to seriously consider using your tax refund to pay it down, because credit card debt is getting out of control again, and more expensive."

Outstanding credit card debt in the United States has hit more than $1.02 trillion, according to the Federal Reserve. That's an increase of $11.2 billion since the last count.

The average U.S. adult owes nearly $6,000, according to an estimate from And for those that carry a balance, the average interest rate has climbed to 15 percent and could keep rising.

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That's why if you have credit card debt, paying it off should be a key focus, according to Orman. However, she notes, it shouldn't be your only focus.

Using your refund to build emergency savings can be a smart move, too. "Otherwise, what will happen in an emergency? You'll end up using your credit card!" writes Orman. And "that's not financially smart."

Experts recommend stashing away about eight-to-12 months' worth of savings to cover an unexpected crisis like an accident or sudden job loss. Interest-earning accounts can be a good place to put a portion of your refund or any other extra income you may have.

If you have credit card debt as well as a need to build up your savings, Greg McBride, chief financial analyst at Bankrate, says you should "attack both sides of it." He suggests you "set up a direct deposit from your paycheck into a dedicated savings account, so the savings happen automatically before you even see it."

Then, "with your net pay, you can focus on cutting expenses and funneling as much as possible toward debt repayment."

It seems some Americans are taking that advice. In a Bankrate survey of more than 1,000 U.S. adults, 58 percent of respondents said the balance of their emergency fund or savings account was greater than their credit card debt, which is an increase from 52 percent last year.

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Whether your financial goal is paying down credit card debt, building up savings, saving for retirement or tackling student loans, realize that success may not happen overnight.

"I am not suggesting you can snap your fingers and have it solved in a day, or week or month," Orman writes in a previous blog post. But even small progress can help you evaluate how you spend and save, like "stopping yourself before every purchase and asking, 'Is this a need or a want?'"

If you can remain consistent in that practice, she adds, you'll find you have more money saved that can be redirected toward positive change. "It may still be months or years until you have achieved your ultimate goal, but it will put you on a path toward financial security."

If you've missed the tax deadline, here's what you need to do to avoid getting hit with late fees. And if you find yourself with a bill instead of a refund, here's what you can do to make the best of the situation.

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