We get a refund every year. Not because we pay in(max allowances filed), but because we have three kids and a low income(at least for tax purposes).
We never wasted any return actually. We don't spend any of it like it's free money. It's income like any other income, we just happen to get it in a lump sum. It goes right into the bank. In fact, I feel a high responsibility to use the money wisely since it is a "gift" from other taxpayers to subsidize raising children as future wage earners.
My parents used to get a huge return too. Every Spring we'd all go out to a big seafood dinner. We were allowed to order appetizers, special drinks, adults meals(actually, my parents allowed us to order adult meals all the time, my six year old brother would stun waitresses as he devoured a big plate of snow crab legs)and desserts. But as far as I know, that was the only waste that occurred from the returns. I think the bulk of the return was used to pay our private school tuition.
My parents aren't savers, so the return was like a forced savings account for them. Most of my relatives use the return this way. Treat it like a savings account, buy a little splurge when the return comes and use the rest to pay taxes, insurance, tuition, medical bills, that kind of thing.
For people who can't seem to develop the discipline to save all year, the return is actually a wonderful thing. Consider the alternative, no money saved up to pay the taxes, insurance and tuition but spent in fits throughout the year on stupid stuff because it was burning a hole in their pockets.
