Be Smart! Here’s What You Should Do With Your Tax Return
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What would you do with an unexpected payday? If you don’t have a strategy, you might blow it. It’s been widely reported that 70 percent of people who receive a large sum of money are strapped for cash within a few years. “Most people underestimate the difficulties of managing a windfall,” says Susan Bradley, founder of the Florida-based Sudden Money Institute, which helps people adjust to financial change.

When you suddenly have more cash than you’re used to, you not only field money requests from loved ones and strangers alike, but that Chanel purse you’ve been eyeing is also now miraculously within your price range. The biggest reason people frivol away their cash is because they don’t have a plan, experts say. Whether you receive an inheritance, a milestone gift or a tax refund, here’s how a windfall can improve any financial situation.

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If You’re Just Starting Out…
Fifty-six percent of millennials live paycheck to paycheck, and 45 percent of millennial women say they are “overwhelmed” by debt, according to a 2014 Wells Fargo study. A windfall can help dig you out of the red.

With $5,000 Or Less
Save for a rainy day. Open a savings account at a bank or credit union, suggests Alice Barnes, a financial professional associate with Prudential. To avoid temptation, make sure you don’t have immediate access to the money, Barnes says.

Get an early jump on retirement. Put some funds into a Roth IRA, an account that lets you set aside after-tax income, says Michelle Oliver, president of The Oliver Financial Group.

Cut down your financial stress. Pay off—or make a dent in—a bill that’s giving you grief, Oliver suggests.

With $5,001 to $25,000
Silence your impulsive side. By allowing yourself one pair of Christian Louboutin pumps, for example, you’re less likely to make other impulse buys, Oliver says.

Open a mutual fund. It can contain a group of stocks and bonds, which takes some of the risk out of investing. Starting an account is a good way to make your first foray into the stock market, says Barnes.

Become a home owner. With interest rates low and property values rising, “it’s a good time to buy real estate,” says Marcia Griffin, president of Home-Free-USA, a nonprofit home ownership organization. Put down as little as 3.5 percent with an FHA loan.

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With $25,001 to $50,000+
Educate yourself. Before you hire a financial planner, read books on investing and attend wealth-building seminars so you can be informed before receiving his or her counsel. That way, you can determine whether you’re getting sound advice or just a sales pitch.

Make a career play. Need additional degrees or certifications for your intended profession? Use a portion of the windfall to further your education without racking up student loan debt, says Genevia Gee Fulbright, president and COO of Fulbright & Fulbright, an accounting firm in Durham, North Carolina.

Up your investment game. Learn how to identify companies that are likely to grow by joining an investment club, a group that researches stocks together and invests collectively, Barnes suggests.

If You’re Playing Catch-Up…
If you’ve suffered a layoff, recently gotten divorced or simply racked up a lot of debt, a windfall can be instrumental in getting back on your feet.

With $5,000 or Less
Tackle what’s past due. Payment history constitutes 35 percent of your FICO credit score. Use the cash to make delinquent accounts current.

Buy yourself some breathing room. Afraid you’ll spend the money with nothing to show for it? Schedule a few mortgage, rental or car payments in advance, Oliver suggests.

Give yourself a cushion. Rebuild your emergency fund, aiming for three to six months of living expenses, Griffin says.

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With $5,001 to $25,000
Replenish retirement accounts. Contribute the max—$18,000—to your 401(k). If you’re 50 and over, a provision lets you set aside $24,000, Oliver says.

Turn a hobby into a hustle. Janette Jordan, a 43-year-old supervisor at Freddie Mac, took her interest in making jewelry to the next level by using a bonus to buy materials for pieces she could sell. “I get a lot of return customers because they appreciate the quality,” she says.

With $25,000 to $50,000+
Pay off student loans. Half of Black college graduates finish school with more than $25,000 in student loan debt, compared with 34 percent of Whites. Use some of the money to bring your balance down or eliminate it entirely, Barnes suggests.

Get expert advice. Once you’ve paid your debts, meet with a financial adviser to come up with an investment strategy.

If You’re Financially Secure…
If you’re debt-free and have been saving and investing all along, you’re in the driver’s seat. Protect your newfound wealth and create an even better future.

With $5,000 or Less
Budget in some fun. Designate a portion of the funds for what you’ve always wanted to do, like taking a trip to Europe, Griffin says.

Stop putting off goals. Whether it’s buying long-term care insurance or replacing the dishwasher, use the money to make your life healthier, safer or easier, Bradley suggests.

Add to a long-term objective. Bolster your savings for something on your financial bucket list. Bulk up your child’s education fund, for instance, says Oliver.

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With $5,001 to $25,000
Make renovations to your house. Home improvement projects, such as upgrading the floors or adding a deck, could increase the value of your home, Griffin says.

Create a family-sharing plan. One third of African-Americans provide financial support for children or grandchildren, according to Prudential. Decide who you want to help and how much you are willing to give, says Bradley.

Buy a piece of art. Works can appreciate from 3 to 5 percent over a few years.

With $25,001 to $50,000+
Invest in rental property. If you have the mind-set to deal with renters and property management, a rental property can increase your wealth in the long run, Griffin says.

Make estate planning a priority. If the windfall is more than $100,000, make sure you meet with a CPA or an attorney familiar with tax and estate planning so your wealth can be passed down to future generations, says Fulbright.

Consider philanthropic ventures. Set up a scholarship at your alma mater or donate to a cause that is important to you. You’ll be decreasing your tax burden and making a difference, Griffin says.

Tamara E. Holmes is a writer based in Washington, D.C. This article originally appeared in the June 2015 article of ESSENCE.