7 Smart Things You Could Do With Your Tax Refund This Year
So you’ve done your tax return, filed off the papers and your glorious tax refund is finally in reach. And this year we’re not going to leave it sit in our everyday account or use it all up on food and movie tickets, are we? No, this year we’re going to be smart and use it wisely.
Eighty-two percent of us are expected to get a tax refund this year, with the average tax refund being $2112 – so what should you put it towards? While it’s enticing to treat yo’ self on clothes, fragrances, massages and fine leather goods, don’t go overboard with an unnecessary splurge.
Here’s a few smart ideas to get the ball rolling this tax season and save you any potential financial regret.
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Pay off debt
Look, it might not be fun but paying down debt is probably the smartest way to spend your tax refund. Depending on how much of a refund you get back, it could make a serious dent in that incessant voice in the back of your head that looks down on you every time you fork out for almond milk at the corner cafe. And don’t worry, you’re not the only one going down this path – MoneySmart found that 13% of taxpayers will use their refunds towards paying back loans or credit card repayments, with another 9% using theirs to pay off a home loan.
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Add to (or finally create) your emergency fund
Sometimes things don’t go according to plan: you might lose your job, get made redundant, experience a health setback or your car’s transmission might decide to call it a day on the side of a highway. Things happen – so it’s a smart idea to start a separate savings account or bulk up your existing rainy day fund if you’re ever in that situation. If you’re without an emergency fund, you might struggle to keep afloat if the unexpected happens and you get lost in a sea of random expenses and bills.
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Travel (with a purpose)
Travelling is another great way to spend your tax return – but this year let’s opt for something a little different. Travel to learn a new language, travel to seek out humbling experiences, travel to be of service to new communities – basically, travel with purpose.
And don’t worry about feeling guilty about blowing your money on a holiday – science can exponentially back you up on that front. A recent study from Cornell University has confirmed that the key to happiness is through experiences, rather than things. So if your finances are in order and you can afford a trip overseas, go for it. Science is on your side.
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Put a portion of it voluntarily in your super
Currently your employer is putting away 9.25% of each of your salary payments into your superannuation account – but what if you wanted to put a little more away, and safeguard it for your future? Totally possible. Once you’ve figured out, consolidated and scraped the fees associated with your super you now have the ability to twerk it any which way you please. Get in touch with your super fund and start talking cash ASAP.
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Use the money as a booster to start your own business
Invest in yourself and your ideas this year. If you’ve had an idea on the back burner for a while but haven’t had the incentive to give it a go, use this extra money as the spark that ignites the fire. Got some wiz software idea that you think will really take off? Go for it! Want to start your own Etsy store on the back of some illustrations you’ve done? Do it! Whatever the dream, whatever the goal, now’s the time to get it started. Just make sure you have a solid business model.
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Set up a high interest savings account
In the immortal words of Eagle Eye Cherry, “save tonight” for tomorrow
I’ll your money’ll be gone. Seriously though – your best bet will be to pop that extra cash into an high interest savings account (like this one) so that you’ll be rewarded for being a good saver. Putting your money away so that it can eventually go towards a savings goal is very rewarding – just think, a new car/computer/property is closer than you think.
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Hit up a financial adviser and set up a personal money strategy
You probably associate the term ‘financial adviser’ with pre-retirement people looking to safeguard their fat salaries and impressive investment portfolios, but in actual fact, a financial adviser might just be the smartest move for you right now. Even though you’re at the beginning of your career and have little to no savings to speak of, financial planning will help guide you into the future with ease.
It might start with the small stuff (like organising loans, reviewing debt and teaching you to balance your budget) and then move on to bigger wealth-building strategies (setting up investment portfolios and organising superannuation). It’s all about investing in your future – something we should all start thinking about sooner rather than later. Have a read of our profile on financial advisors here to help you decide whether you need one.
Rebecca Russo is a freelance writer, editor, community radio dabbler, occasional hiker and celebrity autobiography enthusiast. She has written for online publications including Junkee, AWOL, Fashion Journal and Tone Deaf. Find her online here.