Looking at a Tax Refund this year? (even though our refunds are probably reduced this year)
Want some smart ideas of what to do with your Tax Refund?
With some extra coin it is always tempting to go off and splurge, but that is not necessarily a good idea! Try the following ideas of what you can do with your tax refund.
1 – Start/Increase your emergency fund – It’s always a good idea to have some money spare for a rainy day, so if something bad happens you’ll have some cash to use in those emergency situations.
2 – Pay off outstanding credit cards & other high interest debt – If your credit cards & debts are starting to get out of control, use your tax refund to get them under control. Credit card debt is the worst kind of debt with interest on unpaid balances often very high.
As an added bonus point, getting your credit card debt under control will help with your stress levels: no one likes having debts out of control.
3 – Put money into super – This one is far less exciting than going out and spending your refund on what you want, but this is your nest egg for retirement. The earlier in life you put away money, the more time it has to grow for you. Also depending on your income and age, the government may even chip in a bit of extra super for you; have a look at https://www.moneysmart.gov.au/superannuation for more information on this.
4 – Save it – Ok, this one is obvious, but every little bit goes a long way. So if you are saving for a house, car, holiday, etc. your tax refund will help you reach your savings goals quicker.
5 – Donate – Donating some (or all) your tax refund will not only make you feel good, but depending on the organisation (if it’s a deductible gift recipient) this will become tax deductible to you in the following tax year….. and help you get a tax refund!
6 – Treat yourself with what is left over – now I know at the start I said splurging is not always a good idea, but maybe you can treat yourself a little! (You’ve worked hard all year so a little bonus is always good)… but moderation is the key.