How to make the most of your tax refund

July 09, 2017
Kathryn Coleman

The beginning of a new financial year means one major thing: tax time.

You may have already lodged your tax return or are planning to lodge it soon.  You may already be thinking about what you can do with the money you may potentially receive from the taxation office.

At the end of the day, what you decide to do with your tax refund is entirely up to you. But, if you're searching for ideas, then here are some suggestions.

Save for Future Financial security

  • Save it: Do you have a financial goal you’re aiming for? Building your home loan deposit? Would like to buy a car soon? When it comes to saving money every cent counts.  Depending on how much money you receive from the tax office this year, a lump sump credit will find you one step closer to achieving that financial goal.
  • Start an emergency fund: Iit is always a prudent to have a ‘rainy day’ account that can be used to pay for unexpected costs. Often in life we are faced with unexpected bills and other expenses. By setting up emergency funds, you will have piece of mind if and when those unexpected expenses rear their ugly head.
  • Pay down your debts:  Putting a lump sum towards outstanding debts, even your home loan is a great way to improve your financial standing and save on interest expense.  As a general rule of thumb, it is a good idea to pay off your higher interest rate, non-tax deductible debts (like your credit card, personal loan, or car loan) first.
  • Inject the funds into your super  As the population ages and we live longer there will be more time spent in retirement and more time living without a regular income.  Injecting some or all of your tax refund into your superannuation fund will allow you to live a comfortable lifestyle in retirement.  The more voluntary contributions you make over the years, the better off you will be in the long run.
  • Invest: Or, you may be looking to make your money work even harder for you by investing. At Mortgage Choice, our financial advisers can guide you on the best ways and places to invest your money.

Enjoy the cash bonus

  • Buy that item you desire: There is nothing to say that you absolutely have to be responsible with your tax refund.  Lump sum amounts don’t come along every day so why not purchase that item you have been eyeing off for some time.  Buying that item with cash instead of credit is a far better choice.
  • Put it in your holiday fund: Saving money is important, but so is your mental health.  Everyone deserves a holiday and knowing you have the money put aside when it comes time to book adds to the relaxation benefits a holiday provides and helps you reenergise for the year ahead.
  • Invest in yourself: They say when you look good, you feel good. So why not spend your tax refund on you? Get that haircut or new suit you have been thinking about. If you are feeling good, you will be more confident, which could lead to great opportunities in work and life. Just make sure you don’t overspend and add to credit card debt.

For the socially conscious

  • Donate the money: If you are feeling particularly generous, why not donate your tax refund to a charity that you hold near and dear? Not only are you helping a great cause, but you can claim your donation in next year’s tax return.

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Tags: Tax TipsTax Return

Posted in: Lifestyle

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