With money from your tax return suddenly in your pocket, it can be tempting to splurge on something nice. However, your refund is not a bonus. Before you book your next vacation or welcome a furry friend into the family, consider taking a step back and thinking things through. Here are three ways to spend your tax refund wisely.

1. Build an Emergency Fund

It’s important to have a financial cushion to help navigate the unexpected. Job loss or an expensive car repair can significantly alter your financial well-being. Experts recommend having at least three to six months of living expenses saved, with some even recommending up to a year’s worth of expenses with dependencies. If you aren’t confident you have enough money saved in an emergency fund, your tax return can give it a much-needed boost.

2. Pay Down Debt

Once your emergency fund is established, consider tackling any outstanding debt (credit cards, student loans, etc.) It may not give you the same rush as buying the newest phone, but you can reap bigger rewards down the road. Not only will you save on interest and avoid late fees, but you’ll also get out of debt faster, which could help you feel more secure in times of uncertainty. There’s no better feeling than being debt free, no matter which stage of life you are in.

3. Save for the Future

It can never be too early to start thinking about retirement. A trusted financial advisor can help you find safe places to invest for retirement or other areas that align with your long-term goals. If you are satisfied with your current retirement plan and want to save for a big purchase instead, long-term investment options may not be the best route. Cinfed is proud to offer a variety of short-term certificates with competitive rates. Learn more about our certificate options here.

Remember your tax return is not free money – it’s money you should have had the whole time. Avoid making the common mistake of spending your return on something you don’t need. Make wise choices like paying down debt and saving for the future that will set you up for long-term success.