We all work really hard, Wilson said.
“It’s OK to splurge,” Wilson said. “Pay yourself first then have a little fun.”
Just don’t buy something that costs more than your refund, and that will get you into debt, said Fuentes, a proponent of living beneath your means.
Invest in an energy-efficient appliance
Buy a new energy efficient air-conditioning system or hot water heater to save on your electricity bill over time, Wilson said. Some energy-efficient home items, such as solar panels or a solar hot water heater, also can qualify for rebates. Check www.energystar.gov or with your county government office.
Save for college for your kids
If you have not started saving for higher education, open a 529 plan for your kids, which allows for your savings to grow tax free for college costs, Pareto said.
“Then have the grandparents contribute to it or add to it incrementally with $50 a month, or whatever you can afford,” she said.
If you have a little extra, “put it back in the universe and do some good with it,” Pareto said. “Find a charity or cause near and dear to your heart,” she said. “A lot of people live paycheck to paycheck, but it’s nice to pay it forward.”
Take a course
Take a professional development course to make yourself more valuable to an employer and more marketable if you’re looking for a job. “These courses are not terribly expensive and it can possibly get you a pay raise,” Pareto said.
Take a financial planning class at your local community college, hire a financial planner to help you with finances or invest in books or a class to teach your family the value of money, Fuentes said.
“These kinds of things tend to appreciate in value in the future,” she said.
Enrich your life
Enroll in meditation classes or a family yoga workshop, Fuentes said.
“A clear and relaxed mind keeps the body healthy, and this can help you reduce your health care costs in the long run,” she said. “You need to take care of your health and well-being, because you can’t buy that.”
Plan for a lower refund next year
If you’re consistently getting high refunds, you’re withholding too much money, Pareto said. Consult your tax advisor to see if you should adjust the withholding on your W-4 form with your employer.
If you count on a tax refund to get you out of a financial bind, take a different approach to saving, Fuentes said. If you’re not a disciplined saver, set up a direct deposit of your paycheck and have part going to savings.
While a tax refund may seem like found money, “it is still an interest-free loan that you’ve given to the government and they’re returning to you,” Wilson said. “When you file your taxes, the optimum situation is you owing nothing and getting nothing back.”