To save or to splurge? That is the question faced by anyone fortunate enough to receive a tax refund.

For many, treating themselves to a holiday or indulging in a few small luxuries funded by the annual tax refund is a fair reward for the previous year's hard work.

But a little prudence now may be well worth the sacrifice in years to come.

For those who can resist the windfall burning a hole in their pocket, the team behind the Australian Securities and Investment Commission (ASIC)'s Moneysmart resource has some tips to help ordinary Australians make the most of their tax refunds.

Tackling higher-interest liabilities such as payday loans and credit card bills is a useful strategy.

Also, using your lump sum to reduce a car loan or mortgage can save you thousands in interest in the long run.

ASIC's credit card calculator available on its website will help you work out how long it will take to pay off your card with only minimum repayments, plus how much time and money you can save by making a one-off or higher repayments.

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Life is full of surprises - not all of them pleasant.

When it throws you a curveball, having an emergency fund means money is one less thing to worry about while you sort things out.

If you don't already have one, start one.

Open a high interest savings account and aim to build up 1-3 months' worth of living expenses.

Compound interest will help your money to grow.

For example, $3,000 in an account earning 3 per cent interest would grow to $3,485 in 5 years' time.

Depositing extra money into this account will grow your savings even faster. ASIC has an online calculator that you can use to see just how much compound interest can boost your savings.

When you are young and at least 40 years off retirement, putting extra money into super is about as exciting a prospect as watching paint dry.

But ask your closest 65-year-old and he or she will probably tell you how fast time flies and it seems like only yesterday when they started their first job, along with how much better off they would be today if they had put away a tiny bit more all those years ago.

Making extra contributions to your super can really boost the amount of money you will have to live on when you retire.

As you age it can sometimes be more difficult to work or find a new job if you lose your old one, so having as much superannuation as possible can provide real peace of mind leading up to and in retirement.

If you are on a low income, the government will even provide an incentive and match your after-tax super contributions with 50c for every dollar you contribute, up to a maximum of $500.

Investing your tax refund can help keep it safe while it grows.

You may wish to see the advice of a professional skilled in making investment decisions. He or she can help you develop a plan to make the most of your money.

Do some checking to ensure your financial adviser is suitable.

Check he or she is on the financial advisers' register, check their history, qualifications and current employment status before you approach them for advice.

A managed fund is one option to consider. This type of product gives you access to a range of investment types with the benefit of having a professional investment manager choose which individual assets to invest your money in.

For those new to investing, ASIC's guide to investing smarter is an ideal place to start.