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Tax season is in full swing. As you prepare your documents to report to the IRS, you may already have some plans for after they accept your return.

One outcome most everyone hopes for is getting a refund. If you are fortunate enough to be in this situation, you may wonder what to do when you get your money back. Here are a few recommendations that ensure your money works for you.

Build up Your Savings

Let’s get down to the brass tacks: worrying about the price of everything isn’t productive. Now, more than before is a time to take steps to keep you on a solid financial footing.

While the future may remain uncertain in certain aspects, you can stay in control of your situation. One way you can do this is to ensure your savings are in place for the near future.

There are many advantages to building an emergency fund. They include:

• Having money on hand to pay for sudden expenses
• Reinforce peace of mind during uncertain times
• Provide flexibility in budgeting in case of emergencies
  

It is highly recommended that an emergency fund be placed in a separate account. By doing so, you are setting aside a dedicated savings vehicle that reduces the temptation to spend it on a whim.

If you already have enough money saved for an emergency, that’s great! Another way to take your tax refund a bit further is to store it in another savings vehicle, such as a certificate of deposit, money market account, or high-yield savings account. These accounts usually have dividend rates that allow your savings to increase, ensuring you reach your long-term savings goals smartly.

Pay Down Existing Debt

An income tax refund is also a great way to pay off existing loan or credit card debt balances. If you are fortunate enough to receive a refund, this could be your opportunity to keep your debt in control.

Of course, receiving some of your hard-earned money back, only for it to go to outstanding balances, can be a bummer. However, another way to look at this situation is to get ahead of your monthly payments. The sooner you pay down debt, the less you’ll have to pay in interest and the overall value of the balance. 

Take receiving a refund as your chance to evaluate your current financial obligations. It’s possible to make meaningful progress with such a windfall.

You have different avenues to paying down debt with a refund. Some of these options include:

• Using the entire refund to pay down the largest balance.
• Making payments to accounts with higher interest rates.
• Allot portions of the refund across several different accounts.
  

Remember that paying off loans and managing credit card debt is key to improving your credit score. Use your income tax refund to stay on top of these obligations so you aren’t short-selling your future self.

Invest in the Future

An income tax refund is returning your hard-earned money to your wallet. In many cases, investing may be a sensible course of action.

There are many benefits to starting or contributing to an investment account. Some of these advantages include:

• A way for savings to outpace the effects of inflation
• Supplementing an employer-sponsored retirement account
• Tax advantages (depending on the type of account)
  

You have many investment options. All of these avenues have advantages. However, it is essential to understand that investing carries a certain degree of risk, so it is necessary to be informed to make sensible decisions.

To learn about them and their potential pros and cons, it may be a good idea to work with an experienced financial professional. Working with a financial planner will provide some key insights into your savings style and the strategies you can employ that fit your lifestyle.

While tax season can be a little anxiety-inducing, keeping a handle on your return shouldn’t be. When you have a plan for a potential refund, you can have confidence in knowing your money is being put to good use.

First Florida empowers you with the tools you need to save money smartly. Explore our various savings accounts and certificates to find the vehicle that best meets your needs.