04/04/2013 11:56 am ET Updated Jun 04, 2013

What To Do With Your Tax Refund

By Mary Schwager for

This consumer watchdog has a confession: When it comes time to start thinking about what I'd do with some extra cash, I feel as torn as Gollum in The Hobbit and The Lord of the Rings. I hear competing voices in my head saying, "Buy new shoes!" Only to then hear, "Savvvvveeee the money!"

If you're about to get a tax refund and are experiencing a bit of inner turmoil over what to do with it, the experts suggest you save the money.

Fox Business Network's Sandra Smith has some creative ideas on how to use your tax refund to invest in your future, or even your child's future. "We never know what the future holds. Whether it's a growing family, an unexpected move, or a change in jobs, it is always a good time to set extra money aside for an emergency fund. Do it while you can. When money is out of sight, it is out of mind, and we don't spend it!"

An emergency fund, experts say, is a brilliant idea. Just last week Cardhub's Odysseas Papadimitriou told us how devastating an unexpected emergency can be to our pocketbook. "Whether you're debt free or not, the slightest bump in the road could be financially devastating if you don't have an emergency fund." The National Foundation for Credit Counseling found more than half of all consumers don't maintain a budget, and roughly 22 percent say they don't even have a good idea of what they spend on things like housing, food, and entertainment.

Check out Smith's five tips on how to spend your tax refund:

1. Pay off credit cards and other high interest debt.

2. Make necessary home improvements.

3. Contribute to your 401K or your child's 529 plan. These are tax sheltered accounts.

4. Refinance your home to take advantage of historically low interest rates.

5. Save it for a rainy day. Start an emergency fund.

What are you going to do with YOUR tax refund? Let us know in the comments section!

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