If you are due for a tax refund this year, you have probably spent at least part of it in your head while you wait for it to arrive.  Splurging with a tax refund seems to be a pretty typical way to celebrate this time of year.  While it can be great fun to go buy a special treat with that extra money, a better option might be to do nothing at all.

Letting your money sit in your bank account will give you a head start on an emergency fund, or get you that much closer to your goal of making a large purchase, such as a home or a car. 

If you have debts, you might be better off paying those debts down instead of saving your refund, but if you have no money in savings for an emergency fund, that should be your highest priority.  When a real emergency strikes, bills can wait while you do what it takes to survive, and the first order of business is to have access to cash to use for living necessities.

If your refund is large, consider allowing yourself a little splurge, while saving the rest in a savings account or certificate of deposit. 

So, while spending your tax refund may be tempting – it certainly is for me – saving it will almost always be a better option, and second to that, you should pay down bills.  With those two out of the way, you can splurge with what’s left and not feel guilty.