Author: Niki Giardino, AVP & Phelps Office Manager
Tax season is here, and many families across the Finger Lakes region are asking the same question: What should I do with my tax refund? Deciding what to do with your tax refund in 2026 can feel overwhelming, but with a simple plan, it can become a powerful step toward financial stability.
Whether you’re debating whether to save it, spend it, or put it toward debt, you’re not alone. The key is to see your tax refund as more than extra cash; it’s a powerful financial tool.
When used intentionally, it can reduce stress, build security, and help you reach your long-term goals. According to the IRS, the average federal tax refund in recent years has hovered around $3,000. That’s not just extra cash- it’s a meaningful financial opportunity.
Did you know that 6 in 10 Americans say they would struggle to cover an unexpected $1,000 expense? Building even a small emergency fund with your refund can dramatically change that reality. For many households across the Finger Lakes and surrounding Upstate New York communities, spring refunds arrive just as seasonal expenses begin to shift.
Here’s How to Use Your Tax Refund Wisely.
1. Build an Emergency Fund with Your Tax Refund
Before anything else, focus on strengthening your financial foundation. Consider using your refund to:
- Start or boost an emergency fund: Even a small cushion can protect you from unexpected costs like car repairs or medical bills.
- Cover essential bills: Catching up on overdue payments reduces stress and avoids late fees.
A stable financial base makes everything else easier.
2. Use Your Tax Refund to Pay Off High-Interest Debt
Using your refund to pay off credit cards or high-interest loans is one of the smartest moves you can make. Benefits include:
- Lower monthly payments
- Less interest paid over time
- More breathing room in your budget
If you’re carrying high-interest credit card balances, using your refund toward principal can reduce the total interest you pay overtime.
3. Address Ongoing Expenses or Delayed Costs
Have repairs, bills, or overdue expenses? Your refund can help:
- Prepay predictable costs
- Handle maintenance or home repairs
- Take care of medical or educational expenses
Eliminating these financial stressors now frees up money and mental energy later.
4. Invest Your Tax Refund in Long-Term Growth
Your tax refund can be a long-term investment in your financial and personal growth. Consider allocating funds to:
- Retirement accounts
- Education or skill-building opportunities
- Career development that increases earning potential
Future you will thank you for taking this step.
5. Spend With Intention
It’s okay to enjoy some of your refund but make it purposeful.
- Choose one meaningful “fun” purchase instead of letting money disappear through impulse spending.
- Align spending with personal values to maximize enjoyment and satisfaction.
Balanced spending is possible when intentional.
6. Plan Ahead for Next Year
Your refund can help you optimize your finances year-round:
- Adjust your tax withholdings
- Pay estimated taxes
- Meet with a tax or financial professional
Taking these steps can reduce surprises and give you more control next tax season.
7. Use Your Tax Refund to Build Long-Term Financial Momentum
Pick at least one use for your refund that improves your future finances:
Small wins compound into long-term progress.
Additional Smart Ways to Use Your Tax Refund
- Save for a major purchase: Home, wedding, relocation, or other milestones
- Invest in your health: Dental work, eye exams, or preventive care to avoid bigger costs later
- Leave it untouched: Sometimes parking your refund in a high-interest savings account is the smartest choice
Your tax return isn’t “extra” money, it’s an opportunity to create financial momentum.
FAQs About Using Your Tax Refund
1. What is the best way to use a tax refund?
The best use depends on your goals. Common strategies include paying down high-interest debt, building an emergency fund, investing in retirement, or covering necessary expenses.
2. Should I pay off debt or save my tax refund?
High-interest debt should usually come first because it’s a guaranteed “return” by reducing interest payments. Saving is important too, especially for emergencies or planned big expenses.
3. Can I invest my tax refund?
Yes! Tax refunds can be invested in retirement accounts, education, or even personal development to boost long-term earning potential.
4. How can I make my tax refund last?
Plan spending carefully, use part for debt or savings, and avoid impulse purchases. Creating a budget can help your refund make the most impact.
With a little planning, your tax refund can:
- Reduce financial stress
- Build stability today
- Help you reach long-term goals
Not sure where to start? We’re always happy to talk through your options - whether that means reducing debt, building savings, or exploring tools that fit your goals. At Finger Lakes Federal Credit Union, helping members make confident financial decisions is what we’re here for. Stop by your local office or visit FLFCU.org to get started.
About the Author
Nicole “Niki” Giardino, Assistant Vice President & Phelps Office Manager
Nicole “Niki” Giardino serves as Assistant Vice President and Branch Manager of the Phelps Office at Finger Lakes Federal Credit Union. With 14 years of dedicated service, she leads with heart, integrity, and an unwavering commitment to member-focused service — values that reflect both her personal leadership style and the culture of the Credit Union.
Throughout her tenure as a Branch Manager and Loan Officer, Niki has built a strong reputation for delivering exceptional service to members while fostering a supportive, high-performing team environment. Her extensive experience in lending and branch operations has equipped her with deep institutional knowledge and a passion for helping members achieve their financial goals.
Niki’s leadership is grounded in relationship-building, community connection, and a belief that every member interaction is an opportunity to make a positive impact. Under her guidance, the Phelps Office continues to exemplify the service excellence and community commitment that define Finger Lakes Federal Credit Union.