They say “April showers bring May flowers,” but April also brings another dark cloud with it: tax season. Regardless of whether you owe money or expect a refund, there’s something innately stressful about the American tax season. (Fatal car accidents increase by 6 percent on tax day — is it stress? distraction? speeding to the post office at the eleventh hour? — researchers aren’t sure.)

Of course, for those who do get money back from Uncle Sam, the stress at least comes with a payout. But you still have to figure out what to do with that refund.

Since we’re not financial experts (car insurance is more our thing), we can’t offer any professional advice on what you should do with your refund. We can, however, give you a few worthwhile ideas to think about.

How Americans spend their tax refunds

The average tax refund is $3,000. Not too shabby. And with unemployment rates still high, many will welcome a little relief. In fact, in a survey conducted by the National Retail Federation, over 80 percent of respondents reported they planned to use their tax return to pay down debt or put the money into savings — both excellent ideas.

Of course, a little splurge, if you can afford it, is nice too (nearly 12 percent of respondents claimed a vacation was in their future). But before you book your tickets to Hawaii, here are a few other ideas that will last longer than a tan (and won’t leave you burned).

1. Up your car insurance coverages

Car insurance company or not, we can’t help but espouse the value of having more coverage (especially considering the increase in car accidents on tax day). It does have value. Take uninsured/underinsured motorist coverage, for example. Even though it’s usually required that drivers have car insurance, about one in 7 don’t. That could mean heavy costs for you, even if the accident isn’t your fault — totally uncool. What is cool? Being covered. And uninsured/underinsured motorist coverage will do just that.

Esurance has an online Coverage Counselor® tool to help you find the right levels of car insurance to fit your needs (and budget).

And since you’ll likely have refund money left over (upping your coverages generally doesn’t cost that much), consider paying your entire car insurance premium up front — Esurance offers a discount in most states if you do.

2. Invest in life insurance

Life insurance — even more than most forms of insurance — offers protection we hope you never need to use (at least not for a good long time). But the peace of mind is well worth the cost (which is generally minimal). What better way to protect your family than by providing them with the means to cover funeral expenses, future education, mortgage payments, and bills? And the earlier you buy life insurance, the lower your rates will be over time. So this year, consider investing just a little of your tax return into making sure your loved ones are covered.

3. Get renters insurance

Have you ever estimated how much all your stuff is worth? Go ahead. Start adding. Yep, it’s a lot. Now, ever thought about how you’d replace all that stuff if something were to happen to your place — like burglary, flood, or an uninvited visit from Mötley Crüe circa 1986? Is your brain reeling? Don’t worry. There’s a simple solution: renters insurance.

Renters insurance covers the stuff both in and out of your home (like a stolen bike or items taken from your car). It can even cover identity theft and living expenses if something happens to your place. Best of all, it doesn’t cost very much — on average, under a dollar a day. Meaning you’ll still have plenty of refund left to spend on that 52-inch plasma TV, which will, in turn, be covered by your brand-new renters insurance. See how that works?!

4. Get a tune-up

Sometimes you have to spend money to save money. If you haven’t taken your car in for a tune-up in a while, it might be a worthwhile investment for your tax refund. Think of it as a preventive checkup for your car. Keep it healthy now to avoid bigger issues down the road. Plus, a little upkeep — like aligning your tires, replacing worn brakes, and changing your oil regularly — can help you save money on gas.

5. Buy a fuel-efficient car

If you’ve been thinking about trading in that old clunker for a shiny new sumpin’ sumpin’, make sure it’s shiny, new, and fuel efficient. You’ll save money on gas (no small feat with today’s gas prices) and help the environment. Granted, most tax refunds won’t cover a whole car, but they might make a nice down payment, which could lower your monthly payments.

Whatever you decide to do with your refund, the most important thing is that it works for you. Just don’t hide it in your mattress — that’ll make it lumpy.


DIY hacks | For your finances


about Jessica

During her time as senior copywriter at Esurance, Jessica wrote about everything from automotive trends to insurance tips to driving dogs (it’s a thing!). In her free time, you can find Jessica hiking with her dog (who cannot drive), devouring a good mystery, or very slowly learning Spanish.