By John Shadden | Tax season is again upon us, and for many it’s time to cut another check to Uncle Sam. But millions more have crunched the numbers to find, hopefully not by total surprise, that they can expect a refund. As an experienced Financial Advisor, I would like to offer a few tips to investing those refunds wisely. 

First, I understand it’s tempting to put that money into a new toy—maybe you’ve been eyeing a jet ski. And while I’m not saying there’s anything wrong with, say, investments in emotional well-being, I do recommend more salient matters one ought to consider first.

Consider paying off high-interest debt. That’s a credit card with a 30% APR, or a loan significantly above going rates–which these days is just about anything you can’t count up to with one hand. It may be slightly depressing to see that refund immediately slip through your fingers in the service of debt, but remember: you will reap savings for the rest of the year in the interest you’ve avoided. If you have several accounts in the red, first take care of the ones with the highest rates.

Also not as fun as jet skis is a reminder that a refund is a great nugget with which to start building savings. There are many ways to do this. 

Consider putting your refund into a tax-deferred savings plan that one day may pay your kid’s college tuition. Remember, laws governing IRAs, pension and health savings accounts allow current year contributions right up until the filing deadline of April 15. If you’re seeking specific guidance on max contributions, talk to a tax professional.

Or you might want to set aside that money, without tying it up, for the impending purchase of a home or car. Even if you already have the down payment covered, keep in mind that often more money down helps secure a better borrowing rate.

It’s also worth considering something unintuitive: immediately after filing is probably the best time to start thinking about your finances for the coming year. Yes, tax fatigue prevents many from doing this, and that’s perfectly understandable. If you think about it, the moment couldn’t be better—your 2013 tax forms and documents are handy and fresh in your mind. There is no better time to analyze last year’s income and expenditures and use those insights to improve your financial picture in 2014.

{loadposition latestbusiness}

Such an assessment might actually lead you to notice the elephant in this discussion: you probably should have avoided the big refund in the first place.

After all, a refund is just the government returning to you the taxes you overpaid during the year. If you had just held on to that money in the first place by properly scrutinizing details, it could have been collecting interest for you all through the winter in a retirement plan or college fund, instead of being stored in the cold coffers of the IRS.

Lastly, sometimes the best investment in the future isn’t a deposit, but a financial professional who can help you plan your estate, and put in order your long-term financial strategy.

Ok, now that you’ve been responsible, paid off debt and put thought into the future, go ahead and indulge a little, spend some of the refund–but save more of it.

John Shadden is a Long Beach resident and Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Los Angeles. The information contained in this piece is not a solicitation to purchase or sell investments.