I don't think it counts as "splurging" to buy clothes if you need them. Heck, I don't see how clothes can be considered that way at all, unless you're the kind of person who can look at a full closet of clothes that fit and say there's nothing to wear.
I would never spend a gift, whether it's a card or a check, on essentials unless I needed them. Of course, I rarely get such a gift anyway, so.