Sometimes a tax refund seems like free money from the government. Hello big-screen TV, luxury getaway or latest phone. That refund, however, was your own money all along. You’re just getting it back.

By resisting the urge to splurge, you can use that money to enhance your future finances. Here are some of the most effective ways to apply the refund to your financial benefit.

Pay off debt. If you have any high-interest debt, such as credit card debt, you can use the refund to reduce the balance and lower, or perhaps eliminate, the ongoing interest costs.

Add to an emergency fund. Your tax refund can enhance an existing emergency fund or present a great opportunity to get one started.

Contribute to a registered plan. You can be tax-smart and move the refund dollars to a tax-advantaged environment – your Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA) or Registered Education Savings Plan (RESP).

Help offset tax on RRIF withdrawals. When retirement arrives, tax will be payable on Registered Retirement Income Fund (RRIF) withdrawals at your marginal tax rate. But there’s a way to minimize the tax liability’s effect. Every year, invest your RRSP tax refund in a non-registered account, and dedicate these funds to help offset the tax payable on RRIF withdrawals.

If you just can’t resist the urge to buy a luxury item, perhaps you can compromise. Spend some of the refund for your own enjoyment, and apply the rest toward improving your financial future.

Receive tax savings without the refund?

If you’re self-employed, a professional or business owner, your tax break from RRSP contributions may be paying less tax when you file your return. Or if you have tax deductions reduced on your paycheque, your break is freeing up cash throughout the year. While not as obvious as a tax refund, it’s still money that would otherwise have been paid as tax to the government. So all these ways to improve your financial life still apply to your tax savings or extra cash.