Depending on what kind of financial year you had, tax season can feel like a second Christmas or like the Grinch’s birthday. Most of the time, making more money means shelling out more to Uncle Sam, in which case you may not have received a refund at all. However, if you’re like 75 percent of Americans, you can expect a nice check from the federal and/or state government in the form of a tax refund. It’s not chump change either. Last year, the average sum was around $2,800. But before you whip out your credit card on a potentially regretful or impulsive purchase, consider spending it like a grownup.

 

You’ve got to catch up to get ahead

There is absolutely no shame in having a credit card or two to pay off, so long as you commit to getting on top of it. Even if your refund doesn’t cover your entire balance, that’s no excuse to spend your refund on something frivolous when you can make a dent in the damage. Interest can be a nasty demon to keep up with month after month. Using your refund to pay off or pay down your balance gets you the most bang for your buck, especially since you’re actually saving more than just the money that you owe—you’re saving on what you’d be charged in interest, too. Plus, you can look into transferring any remaining debt to another credit card with a lower interest rate. If plastic isn’t your problem, you can use your refund to get ahead on other debts, like student loans.

 

Save it for a rainy day

If you don’t have anything set aside for emergencies or retirement, your tax refund can be a great way to jumpstart your savings. Depending on your personal financial situation, you don’t necessarily have to tuck the whole thing away either. Whether you’re planning for a longer-term financial leap (like a move) or just want to soften up your cushion, your refund is a great way to meet that goal. And how’s that emergency fund looking? Nerd Wallet points out that it’s always a good idea to have enough set aside to cover three-months worth of expenses. At Nav.it we like to say minimum 3 but upwards of 6 – 9 months is pretty awesome, just in case you want to peace out to Bali for a month and apply to jobs from there. 

 

Show yourself that patience pays off

Have you had your eye on a high-ticket item for a while? Your tax refund could bring you that much closer (or all the way) to scoring the object of your splurge-worthy affections. One of the best ways to optimize your big-ticket shopping money is to open a high-yield savings account.  (Make money by choosing the right savings account? Yes, please). Just make sure not to dip into it every time you’re feeling a little spendy. Some of these accounts require you put a lot in to get any out, but others require a very low minimum deposit. So do your research and make sure the terms make sense for you.

Make your money work for you

The best kind of money is money that makes more money. Putting your tax refund toward an investment portfolio might not be as fun as spending it on a designer bag or dream vacation, but imagine how many trips to Italy you could afford when you’re refund-cum-investment account earns an average 7 percent annualized return. If you invest your tax refund every year for the next 20 years, you could double the amount of money you actually put in just by being patient.

Consider the emotional return on your investment

Now, I love me some retail therapy as much as the next sartorially inclined spender. But here’s the thing: most designer duds won’t be as lust-worthy a few seasons from now (even if it is…Chanel). Consider splurges with long-term returns, like guitar lessons or a gym membership. The ability to woo the bae of your dreams with a few chords never goes out of style, and neither does a healthy mind and body. If you’re already super fit and talented, consider spending your newfound cash on an experience you can share with others. The memories are always worth it.