Americans are far behind where they should be when it comes to retirement savings, financial planners say, and everyone knows it's because U.S. consumers are the world's biggest spendthrifts and debt holders. When tax refunds arrive, personal finance experts say people should regard the windfall as a chance to fix their shabby finances.

Consumers have less cash in their wallets this year than last because of a payroll tax hike at the start of the year. Still, jobs and housing are finally looking brighter, and that usually heralds more shopping from pent-up demand. History tells us that windfalls tend to be spent more like gambling wins or bonuses than like weekly paychecks.

So what do people say they are doing when they finally get those refund checks averaging almost $3,000?

They are saving it, according to surveys. And that's good news, say financial planners.

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Shopkeepers across the land see it as bad news. Their own trade group, the National Retail Federation, recently released a survey saying most people are saving and not spending. The trade group's president, Matthew Shay, sees that as regrettable because consumers should be "investing their hard-earned money"—on shopping trips that spur overall economic growth.

That might help the GDP, but David Batchelder, chief investment officer at Measured Wealth Private Client Group, LLC in New Hampshire, says it will not do much for most people's finances. Tax-refund recipients would be wise to avoid the siren call of the mall or costly vacation destinations and keep working to get their finances in order.

Tax refunds represent "one of the best chances a lot of people will get all year" to repair their finances, Batchelder says. If you do want to stroll the mall, avoid the travel agent and big-ticket purchases. His sage advice: "Go get an ice cream cone. That won't mess up your future."

Batchelder has his own "shopping list" of the three smartest things to do with that annual refund check. None of them involve strolls to the mall. They include:

1. Pay down high-interest rate debt. "That's No. 1 on my list for anyone who is getting a refund," says Batchelder. The best way to put the cash to work is to pay off a credit card requiring double-digit interest payments. By eliminating that payment, you are, in effect, gaining a double-digit return on your investment. That's hard to beat in this low-rate environment.

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The debt problem is still widespread, even after the deleveraging that took place in the recession. The Federal Reserve says U.S. consumers have $850 billion in credit card debt alone, or about $7,000 per household, and overall consumer debt of almost $23,000 per household. That includes auto loans and other personal debt, but not home mortgages (which amount to $13 trillion, according to Fed figures).

2. Fund your retirement account. "Time is running out to fund this year's accounts," says Batchelder. But even if you get a refund after April 15, he says, you can still take advantage of tax-deferred savings on your Individual Retirement Account (IRA) for the entire year. The tax deduction of up to $5,500 for 2013 (or $6,500 if you are over the age of 50) can be taken in the following tax year.

Why is this item so important? Many people lack sufficient funds for retirement. The Employee Benefit Research Institute (EBRI) reported in a recent study that 57 percent of workers have less than $25,000 put away.

3. Fund an emergency savings account. Putting aside your tax refund in an emergency account can help tide you over should a job loss or unexpected expense occur. It should be readily accessible cash. Keeping this amount in a savings account can play an important role in protecting your tax-deferred long-term savings. If you need to raid your IRA, you could incur a 10 percent penalty, unless you qualify for a hardship withdrawal. Either way, it generates an immediate tax liability and it is paid as ordinary income.

The EBRI reports that only half of workers say they could definitely come up with $2,000 if an unexpected need arose within the next month. Financial planners say a rule of thumb is to have six months of expenses covered by an emergency fund.

College loans: Not the best use of refunds. Many recent graduates struggling with college debt will have the urge to pay the loans off more quickly. It's the fastest-growing debt category and, at about $1 trillion, it surpasses credit-card indebtedness. Still, it's probably not the best use of a refund, Batchelder says. As burdensome as student loans are for recent graduates, they have relatively low interest rates, which puts them further down the priority list.

The urge to save and cut debt remains strong despite the economic recovery. The National Retail Federation survey showed that 37 percent of people say they will use their refund money to pay down debt, while 44 percent will put it into savings and 29.7 percent will use it for everyday expenses. The normal pattern in economic slowdowns is for cautious consumers to hoard cash and start saving for the worst. When the economic recovery comes, people go back to their spenthrift ways. Not this time.

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The "mentality from the recession" survives, said Melanie Backs, American Express spokeswoman, when the credit card giant released a survey with findings which, like the retail group's, show consumers staying conservative. Amex says only 28 percent of people expect to spend refunds on family, travel, home improvements or big-ticket items—most are aiming for savings or debt reduction. The recovery's slow pace of job growth may be one reason frugal consumers rule. The extreme decline of home prices has also had a prolonged effect on people's sense of well-being.

But Backs sees a silver lining in this year's defense-minded personal finance playbook. As things get better, "people are feeling more confident," she said. But even as the recession fades to memory, they are resisting the urge to overspend at the expense of financial security. "They learned some valuable lessons," she said.

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