It’s March, and some people may already be waiting for a tax refund check from the federal Internal Revenue Service (IRS), a commission payout, or a bonus from their work in 2023.

An expected refund, commission or bonus can inspire exciting plans for spending our new money. Splurging on something self-indulgent might seem justified as recent challenges with the U.S. economy have been stressful for many people, both financially and in other ways. It’s natural to want to reward ourselves using part or all of a tax refund or bonus, which we may think of as extra money that’s different from our regular pay. Keep in mind that tax refunds are money that you’ve already earned. Whether it’s your regular pay or a refund, commission or bonus, you should be still be responsible with how you use that money—you can treat yourself but also take care of yourself in other ways.

Just a few ideas for managing your 2023 tax refund, commission or bonus money—including having fun with it

Here are a few ideas to consider to help yourself and enjoy your money:

Pay your regular bills. If your job was affected by the pandemic, it may be that the best thing you can do with any additional money is to stay current with your regular financial obligations, pay bills and pay down any additional debt you may have accumulated, such as credit card balance interest.

Add more to your savings or money market accounts—or put funds into a certificate of deposit (CD). It's always a good idea to add to your savings. For many people, they start building their financial resources with a basic savings account. Saving accounts earn interest and can be linked to include direct deposit of a paycheck or to a checking account.

If you want to have a flexible account that can earn a higher rate of interest for your savings, look at a money market account. These accounts don't lock you into a fixed interest rate or long-term commitment. Often with these accounts, if you maintain a certain balance, you will earn dividends at a higher rate than a savings account.

A certificate of deposit is another way for you to watch your money grow at a higher interest rate than a savings account. It is similar to a savings account in that it helps you grow your money, but CDs are a time deposit. When you put money into a CD, the money accrues interest for a fixed amount of time (fixed-term) and can be used once the certificate of deposit has matured—when the fixed-term is complete. CDs can be typically be invested for terms of 6, 12, 24, 36 or 60-months. Delta Community has increased the interest rates on its CDs over the past year; they are competitive and worth a look!

Put more money in an IRA or other retirement savings account. The additional funds you receive now can make a big difference in the future. If you use them to make an extra contribution to your Roth IRA or a traditional Individual Retirement Account (IRA), they could significantly increase by the time you retire. If you don't already have an IRA, use your refund/commission/bonus to jump-start one. The maximum IRA annual contribution limit in 2024 is $7,000 and if your age is 50+ it is $7,500.

Make your Health Savings Account healthier. A health savings account (HSA) allows you to save money for expected healthcare expenses, and it also offers tax advantages. Maximum HSA contribution amounts for 2024 are $4,150 for yourself and $8,300 for families. The annual “catch-up” contribution amount for individuals age 55 or older is $1,000. Money saved in an HSA reduces your taxable income, which can add up to significant savings. Money taken out of your HSA for qualified medical expenses is tax-free and, similar to a 401(k) retirement account, the HSA is yours to keep.

Build—or rebuild—a short-term emergency fund. Finance professionals typically recommend saving the equivalent of three to six months' worth of living expenses in a separate emergency fund to offset an unexpected job loss, medical emergency or other financial setback. As the recent pandemic unfortunately demonstrated, for many Americans it can be difficult to ever start, let alone maintain, an adequate short-term emergency fund. That's why using your tax refund, commission or bonus payout to start or build up your savings is something you will be thankful for when you need it.

Pay off high-interest debt, such as credit card bills. One of the best ways to spend your tax refund is to eliminate credit card balances and other types of high-interest debt. Reducing high-cost debt not only relieves the stress of making monthly payments; it also enables you to save hundreds, or even thousands, of dollars over time. Even paying down part of your credit debt will help save money.

Help others with a charitable donation. If you're in a strong financial position, consider if you might want to help those in need with that additional money you’ve received. Perhaps you can assist a family member or a friend who needs financial support, or give to a charitable organization. If the organization is tax-exempt under section 501(c)(3) of the Internal Revenue Code then your contribution may be tax deductible—so you are helping others and helping yourself by lowering your 2023 taxes.

Do something good for yourself because you deserve it. If you eliminate high-interest debt and fully fund your savings and emergency accounts, you may want to indulge just a bit in a smaller, more personal reward to thank yourself for your disciplined money management. Consider treating yourself, but not extravagantly—give yourself a nice takeout meal from a restaurant, purchase some new clothes, rent a movie from a streaming service, buy music, a book, or videogame, or do something else that you would enjoy.

What some people plan to do with a federal income tax refund, how to check on the status of a refund and other tax news you could use

A 2023 National Retail Federation^® survey found that approximately 50 percent of those surveyed planned to use their tax refund to contribute to savings, while the next highest percentage, 33 percent, were going to use the refund to pay down debt. The third highest group of survey respondents, 28 percent, intended to use their refund for “every day expenses.” These survey results are great news, because the smartest thing you can do with any extra income is use it for necessities, including increasing your savings and decreasing your debt. That’s why we’re offering a few recommendations to the question, “What should you do with your 2023 tax refund, commission or bonus money?"

Taxpayers can usually check the status of the current year’s income tax refund with the IRS approximately 24 hours after e-filing it. If you filed a paper tax return, the IRS says that you should allow about four weeks before checking the status of the refund.

The IRS also provides a free direct deposit option for savings accounts, allowing you to deposit your refund in up to three accounts in any U.S. financial institution, including savings and checking accounts. You can even direct your federal refund money toward the purchase of up to $5,000 in U.S. savings bonds to invest in our country.

Consider carefully whether you should adjust your withholdings for 2024 so you don’t get a refund. You have the option to decide to have so little money withheld from your paycheck in 2024 that you are sure to not receive a refund in 2025. While a tax refund may sound like a windfall, it really means you had overpaid your taxes. Consider not using withholding taxes as a sort of forced—but effective—savings plan; if the money isn't available to you because it's held by the federal government then it is easy to save what you can't access and spend. If you can manage it, you might be better off to give up the year-end refund and keep the extra cash in each paycheck to save, invest or use wisely throughout the year, rather than giving a loan to the U.S. government.

Looking for more money advice for the very low price of free?

For more information that may help you manage your costs and finances, look into the free Delta Community Financial Education Center webinars on a range of practical, “how to” financial topics. Please visit the Financial Education Center's Events & Seminars page to review and register for its on-demand webinars.

The Credit Union’s blog has more information that could be educational and helpful:

• How a CD can boost your savings
• 5 ways to save money on life insurance
• Living Your Best Life…Insurance—Term vs. Perm
• Making tough financial choices in a tough economy
• Working from home? Here are 15 financial tasks you can do now
• What is good debt vs. bad debt?
• 10 steps to financial success: part one
• 10 steps to financial success: part two
• 10 steps to financial success: part three
• Buying a car: credit union financing vs. dealership financing
• Three basic tips for buying your first home

Do you need help achieving financial BALANCE™? Could you use experienced, free financial advice?

BALANCE™ is a financial education and counseling organization that offers free services to Delta Community members. Some of its services include credit report reviews, debt management, and information on budgeting, money management and home buying.

Visit the BALANCE™ website to learn about their education and assistance programs. Members can also speak with certified credit and housing counselors to get personalized guidance.

Want to connect with a Financial Coach about your specific situation? Chat online, e-mail, or call 1-888-456-2227 to speak with a Financial Coach today.

Note that the services offered through BALANCE™ are separate and distinct from any business conducted with Delta Community and are not guaranteed by, nor are they obligations of, the Credit Union.