Expecting a substantial income tax refund this year? Most Americans are, in fact the average tax refund last year was about $2,700 which is more than a month’s salary for 2 out of 3 citizens. You may plan to splurge a little (who doesn’t), but you should also take advantage of this opportunity to secure your finances for the long haul! In no particular order, we present 5 ways to make your tax refund stretch!

1) Pay Down Debt- That’s right we start with everyone’s favorite expenditure, bills! For many people, a tax refund can be a lifeline in getting caught up with overdue house and car payments or other bills. To prevent foreclosure, repossession, or disconnection your priority should be to get caught up on bills. After everything is caught up look to paying off any high interest consumer debt you may have. With average annual interest rates for credit cards and personal loans hovering around fifteen percent, paying off that Visa card before making other investment decisions makes good sense. Yes, consumer debt includes car loans. If you owe more in consumer debt than you can pay off immediately, make a plan to pay it off as quickly as you can.

2)Save- I’m sure you’ve been told that you should have enough money put aside in a savings account to cover at least 3-6 months worth of living expenses in case of emergency. The truth is the vast majority of people simply don’t have it. Well, your tax refund is a great place to start! Put up a portion of your return, somewhere safe and accessible for emergencies like a savings account or money market fund.This will help protect you from losing your home or car and struggling to make ends meet in the event you lose your primary source of income or should you encounter any other emergencies.

3)Start A Company- What better time to invest in yourself? Starting and marketing a small business can be relatively cheap in this day and age, yet still produce another viable income stream. Contacting a business consulting firm such as The Bill Minor Group can greatly help you establish your business and reach customers efficiently and as cost effectively as possible. If you already have a company investing in things such as products, materials, website design etc can be essential during this time.

4) Prepare For Tomorrow- This is the perfect time to invest in your retirement account and in your child(ren)’s education! A Roth IRA allows you to put money away that will grow to be tax free after age 59. In the meantime, your money isn’t tied up since you can withdraw the sum of your contributions without tax or penalty (however, earnings may be subject to taxes and penalties if withdrawn before age 59 1/2). Save for your child’s college education with a 529 plan. It works much like a Roth IRA, and withdrawals are completely tax-free when used for higher education purposes.

5) Give It A Break- That’s right, take a break and go on vacation! If your financial needs are taken care of, go ahead and enjoy yourself, but consider splurging that refund on an experience like a vacation. Research shows that you buy more happiness that way than purchasing a luxury item that you really don’t need.

Although all the preceding ideas are excellent uses for a lump-sum amount of cash, remember that instead of planning for a refund, it’s best to come out even. A tax refund is an interest-free loan to the government, and money that is not in your pocket every month. If you have been getting a refund back each year, consider changing your withholding exemptions so less tax is withheld from each paycheck. While a tax refund may feel like a gift from Uncle Sam, it’s not – it’s money that you have overpaid on your income taxes.