1. Start or Increase Your Emergency Fund. Just one surprise major expense can send you on a debt spiral toward financial trouble. Your fund should contain about three to six months worth of savings. Using your refund can make a significant deposit to your emergency fund.
2. Pay Off High-Interest Debt. The next best thing after establishing an emergency fund that you can do with your tax refund is to reduce or eliminate any high-interest debt. Start paying down your debt whether it be payday loans, title loans, debt consolidation loans, high-interest private student loans, car loans, or credit card debt.