Getting a tax refund? These six ideas can help you think before you spend.

Who doesn’t like getting a tax refund? There are so many ways to spend it! Before you fill up your cart with impulse items, think about how you could use that cash to boost your long-term financial security. This article shows you six excellent ways to use your IRS windfall.

1 Pay Down Debt

If you have high-interest debt, including credit card balances, tackle that first.

It may not be the most exciting way to spend your refund, but you’ll get more bang for your buck if you put that money toward reducing your debt load.

Where should you start? If you have high-interest debt, including credit card balances, tackle that first. Paying it off – or at least paying it down – is a smart investment. It’s simple math: Putting that $2,000 IRS check in an account paying 1% interest while carrying a $2,000 credit card balance with 15% interest doesn’t make much financial sense.

Once those monthly payments go away, you’ll be able to put that money back in your pocket.

2 Feed Your Emergency Fund

Let’s say you’ve paid off your high-interest debt, and you’re thinking about what else you can do with that extra money. Then, your car breaks down. Or your refrigerator conks out. Or your basement floods. Or you get hit with an unexpected medical bill. Do you see where we’re going with this? You can never go wrong with saving money for emergencies.

Unfortunately, many people don’t have enough savings on hand to deal with a sudden financial need. Using your tax refund to start or add to an emergency fund can help you be prepared for unanticipated expenses.

How much should you put away? Experts recommend having at least three to six months’ worth of living expenses set aside in an interest-bearing savings account. But if you can’t manage that, every little bit helps – even $500 can come in handy in an emergency. So, use part of your tax refund check to boost your emergency savings and then put aside a little cash each month to further prepare for an unexpected expense.

3 Build Your Savings

Okay, so you have an emergency fund, but that doesn’t mean you should neglect other reasons for saving. You can put your tax refund toward a vacation, a car purchase, or maybe a down payment on a house.

Think about other ways to save. The IRS lets you split your refund between up to three accounts when you use direct deposit, which means you can sock away some cash in a separate account where you won’t be tempted to spend it.

Consider opening a money market account, which often pays higher interest than a saving account. Keep in mind that you may need a higher balance to open the account, avoid a monthly fee, or earn a higher rate. Whatever you manage to save, the important thing is to get in the habit of putting money away and sticking with it.

4 Make Home Improvements

Putting money into savings is smart, but you can also use it to protect one of your most valuable assets – your home. Making improvements to your home can not only increase its value but can make it a more enjoyable place to live.

Before you call the contractor, think about what renovations make the most sense. If your house needs repairs, taking care of them early – before they cause major damage – can save you money in the long run.

If you’re thinking about renovations, you’ll want to invest in capital improvements, like replacing windows, updating a kitchen or bath, building a deck, getting a new roof, or building an addition. These are things that increase the home’s value, improve functionality, and make it more attractive to buyers if you put your house on the market. Keep track of what you spend. You’ll need those numbers when you decide to sell.

5 Save More for Retirement

If both your savings and your home are in good shape, think about beefing up your retirement account. Investing your tax refund in your retirement fund can really pay off, especially when you harness the power of compound interest. You could take a $2,000 refund, invest it for 10 years with a 6% annual return rate, and you’ll grow that initial sum into more than $3,500. If you keep investing $2,000 yearly during those 10 years, you could build an even bigger nest egg of $28,000. Do that for 20 years and you’re looking at $78,000! That’s nearly double the $40,000 in tax refunds you invested.

The earlier you start saving for retirement, the more your money will grow, and the more financially secure you’ll be.

6 Treat Yourself

We saved the best for last. If your savings are solid, you have an emergency fund, you aren’t facing major home or car repairs, and you’re already saving for retirement, maybe it’s time to splurge on that big extravagance you’ve been dreaming about (85-inch TV? Barista-quality espresso maker? Smart refrigerator? All-in-one washer and dryer combo?)

It doesn’t have to be an all-or-nothing proposition. You can be responsible and still have fun with your money. Experts recommend using 10% to 25% of your refund for something enjoyable, like taking a vacation or going on a shopping spree.

By making smart choices, you can ensure that your refund keeps working for you, putting you in a better position for the future.

Want More Ideas?

From putting away money for college with a 529 education savings plan or making an extra payment on your mortgage to starting your own business, there are many more great ways to use your tax refund. Reach out to your financial institution for help planning your finances.