Tax season is finally over, which means nearly 80% of Americans will have a refund hitting their bank accounts over the next few weeks. If you’re one of them, you need to have a good plan for your money. Before you take yourself on a congratulatory spending spree, think about your personal financial situation and where you are in achieving your goals. After all, this isn’t a bonus check from the government, but money that should have been yours all along. Here are some things to keep in mind when coming up with your plan: 

If you’re getting a big refund, you may be having too much withheld from your paycheck. The average refund this year is nearly $3,000, which amounts to nearly $250 per month. While it feels good to know you won’t owe any tax money on filing day, think of this as an interest-free loan you’re making to the government all year. That $250 per month could have been working to get you closer to achieving your goals—maybe by being used to pay down debt or earning a return in an investment or savings vehicle. Revisit the withholding allowances on your W-4 and talk to your Human Resources rep or tax consultant to make sure this doesn’t happen again next year. 

Try not to think of your tax return as free money.
Try not to think of your tax return as free money.

Earmark the majority of your return to pay down debt, if you have any. High-interest debt is debt that you want off of your balance sheet—it’s like getting a negative return on your money since you typically end up paying interest on the interest. This is the kind of compounding interest we don’t like to see. If you’re carrying balances on a credit card or have any other kind of high-interest loan, paying more than the minimum monthly payment is the best way to cut your losses. 

Evaluate where you stand on your personal financial goal plan. Now might be a good time to take stock of your personal finances and see how far you’ve come—and how far you still need to go—to achieve your financial goals. Whether it’s saving for a down payment, helping your child pay for school, or saving for retirement, the more you save now is the sooner you reach that goal. 

Have a little fun—in the way that matters most to you. Now that we’re past the “eat your vegetables” advice, we’re going to tell you that it’s okay to spend some of that return, as long as you’re being mindful about it. A good method would be to apply to your tax refund the same percent of your monthly budget you allow for eating out or flex spending. Another tip: spend your money in the places where money really can buy you happiness, like catching up with a friend over glasses of wine or donating to a non-profit that you care about.