LITTLE ROCK – When tax time turns into a refund windfall, adults are more likely to use the money to save or pay down debt than to go on a spending spree, a survey by the National Endowment for Financial Education finds.

“If you came across $1,000 free and clear, you’d think the first instinct might be to run to the racetrack,” said Laura Hendrix, assistant professor and financial management specialist with the University of Arkansas System Division of Agriculture.

However, “two-thirds of U.S. adults would put that $1,000 into savings,” she said. “28 percent would pay down debt and only 2 percent would use it to splurge on something, according to the survey.”

Hendrix said that tax season is the time when many people can expect $1,000, or more, free and clear. The average refund last year was $2,797 and 70 percent of filers received refunds. She offers five ways to make the most of your tax refund savings:

Build an emergency fund: Aim for enough money to cover at least two to six months of expenses. An emergency fund can cover unexpected financial needs such as car repair bills, medical emergency or job loss. A tax refund can be a giant step toward reaching the savings goal for your emergency fund.

Save for retirement: “Most Americans aren’t saving enough for retirement and you can have all or part of your tax refund deposited into an IRA,” Hendrix said. As an added bonus, retirement savings contributions may provide tax benefits for the next year. “By saving for retirement you give yourself the gift of a financially secure future.”

Add principal to your mortgage payment: Even small increase in the principal can add up to big savings. “Paying down the principal saves money on interest and reduces the number of years you’ll be paying a mortgage,” she said. “Be sure to designate on your check or auto-payment that the additional money is to go toward the principal of the loan. You can save thousands of dollars in interest and take years off of your mortgage loan.”

Pay down debt: Save interest and free up monthly budget. “Use at least part of your refund to make additional payments on any debt that you owe,” Hendrix said. “Get those pesky payments off your back and save money on interest. Pay off or decrease credit card debt. For example, a $3,000 balance at 14.4% with a minimum monthly payment of $90 would take 11 years to pay off and cost more than $1,000 in interest charges. “Paying down debt frees up breathing room in your monthly budget.”

Make saving easy: Use IRS Form 8888 to direct deposit part of all of the incoming tax refund into up to three bank or credit union accounts; including an IRA.