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I would recommend upgrading the pickaxe, personally.
You can mine faster for more iridum and it's the tool you use most often because mining will take up a large portion of the game. Like, yeah watering can also seems like a decent choice, though I'd rather go directly to iridum sprinklers unless I got a REALLY huge farming-area.
Hoe and axe are just nice to have, but nothing major.
If you have access to Iridium however then the Axe. Mining is mostly explosive ammo and bombs unless you are doing it the hard way lol. And wood is a highly in demand resource.
I would do the same :
Upgrade the pickaxe and build 1-2 iridium bands since it allows you to aquire more iridium faster ... even if fast skull cavern runs are mostly bombing runs, you sometimes have to break single rocks or go for single iridium nodes or you have to fight ...
If you don't enjoy to go to skull caverns, there are peaceful ways to get iridium :
- The statue of perfection after the end of year 2 provides some free iridium ore every day.
- The statue of endless fortune from the casino has a chance to give free iridium bars.
- Crobus sells one iridium sprinkler per week on friday.
I normally save all the jade I get and duplicate as much as I can using the Crystalarium.
Buy loads of stairs from the desert trader on Sundays and dive to floor 140+ using stairs then use bombs, max luck, luck enhancing food, and triplet shot espresso's. Can easily get 100 iridum bars in one dive and at least 2-10 prismatic shards... craft any iridum stuff you need then build more Crystalariums and repeat. P.S this is a great way to get auto-petters as you don't miss any floors.