The average tax refund is around $3,000; that’s a nice chunk of change! However, it’s a dilemma every year for many folks. Should you invest it? Should you enjoy it?

While there are several good ideas on how to put that money to use, let’s look at several things that it’s best to avoid:

1. Spend it all on an insignificant purchase. 

You worked hard for that money. Consider using it for something that’s meaningful to you or increase its value with a wise purchase.

If you invest that tax refund, it can have a significant effect on your retirement. This is a great time to put that entire amount into an IRA. That $3,000 put into an IRA every year is worth over $180,000 after 20 years at a 10% return.

Consider all the things you’ve purchased over the last 5 years that got you really excited at the time. Would you rather still have those things or would you rather have all that money back?

IF you prefer to spend it, spend it on something you’ll remember forever. Putting it in your bank account and spending a little here and there isn’t likely to result in something meaningful.

For example, if you’ve never seen the ocean, take off for the beach. If you’ve always wanted to see Europe, maybe now is the time to go. Buy a piano if your dream is to learn to play.

Create a tax break for the following year. If you have to go shopping, consider increasing the value of your refund by buying something that will pay you back. For example, maybe solar panels for the house are in order: you’ll get a tax break next year, help support the environment, and increase the value of your home.