15 Ways to Spend Your Tax Refund Wisely
Got a fat cheque from your tax refund? Make it work for you with these smart tips.
It’s tax refund time and you just got a fat cheque. While it’s always tempting to spend your tax refund on a personal treat, there are other routes to consider that could help alleviate financial pressure and set you up for better financial success.
Here are 15 alternatives to consider.
Get overdue bills off your back
A tax refund can be a lifesaver if you’re behind on bills. It will help repair the damage done to your credit score and give you better leverage when negotiating a mortgage renewal or other loans.
Increase your monthly income
If you’re carrying credit card debt or a high interest payday loan, this is your chance to get it off your back or at least make your monthly payments more manageable. If you’re carrying a payday loan, reduce your interest payments through affordable alternatives like First Calgary’s Cash Crunch Loan.
Your tax refund is a great way to start or boost your emergency fund. You can keep adding to it so you can cope in a crisis and avoid getting into debt. Earn investment income tax-free on your emergency fund with a Tax-Free Savings Account.
Invest in your kids’ future.
An RESP is a tax-deferred savings account that financially prepares your children for further education. Contribute up to $50,000 per child and the government will boost it by up to $7,200, growing your kids’ college fund even more.
Spend it on something you really need.
Do you need dental work, a new car or another essential purchase you’ve been putting off for lack of funds? Pay for it outright or make a large down payment so monthly costs are more manageable.
Put it towards a relaxing retirement.
Use the money to invest in an RRSP, a tax-deductible, registered retirement plan and start on the road to a comfortable retirement. Tax is only paid when you withdraw money, when you’ll probably be in a lower tax bracket.
Save the planet — and your money.
Making your home more energy efficient helps to reduce carbon emissions and heating bills and gets you rebates. See efficiencyalberta.ca for details.
Get on the path to becoming a millionaire.
Start up your portfolio of investments with online trading through Qtrade Investor. The sooner you start, the sooner your investments will grow.
Begin good savings habits.
Now is a good time to set up a budget and make regular savings. Use your refund to jump-start your savings (like with First Calgary’s limited-time 1.75% high-interest Elite Savings account or a fee-free investment with great returns). Start good habits and put yourself on the road to financial security.
Sleep better at night.
Insuring yourself and your family against the unexpected is a great investment. Life and critical illness/disability insurance can bring you peace of mind, knowing you and your loved ones are financially protected if you die or can no longer work.
Feel good by doing good.
Your tax refund gives you a good opportunity to help your favourite charitable cause. As well as helping others and making you feel warm inside, your donations are also tax-deductible.
Use it to build your dream.
If you have a great business idea, use your tax refund towards getting it off the ground. You’ll probably also need to borrow money to get started, but the more money you can put into the business yourself, the less debt you’ll have.
Start saving for a home or pay off your mortgage faster.
Down payments can be tens of thousands of dollars — use your tax refund to give your down payment savings a head start. If you already have a mortgage, use your refund to pay down the principal every year and pay off your mortgage much faster.
Invest in yourself.
Now is a great time to invest in your career by taking a course that provides you with skills that make you more marketable.
Buy an experience.
Studies show that experiential purchases like vacations, classes or a road trip make us happier for longer than buying material things. If you’ve got everything else covered, taking a vacation is a great way to recharge your batteries and get reenergized.
Whatever you decide, be sure to take the First Calgary team up on a free financial plan and review of your finances. First Calgary teams help guide you on the best use of your tax refund for your personal situation, taking into consideration your short-term and long-term goals.
Contact First Calgary and make the most of your tax refund.