The BEST ways to spend your tax refund
Tax season is almost over and that means it’s time to start thinking about how you should best spend your tax refund. While the temptation to splurge on that vacation or big purchase may be strong, there are some more mindful options that can help set you up for financial success in the long-term. I have some top tips that can help you make the most of your tax refund.
Save for Retirement: Your long-term financial security should always be a priority and investing part of your tax refund in retirement savings is one way to do this. Whether it’s contributing to an existing RRSP or TFSA account or setting up a new one, this can be a great way to ensure that you have money saved for the future.
Pay Down Debt: If you have high-interest debt like credit cards or student loans, using your refund towards paying those down can help reduce your interest and free up cash flow in the short-term. Even if it’s just a small amount, it’s worth considering as even the slightest reduction in debt can make a big difference.
Save for Long Term Goals: Whether it be a new car or a down payment on a house, having money saved for those bigger purchases is important. Consider putting some of your tax refund towards an existing savings account or setting up a dedicated one for those larger financial goals.
Buy Life Insurance: Thinking about life insurance can feel daunting, but with the right plan in place it’s an essential part of your financial security. Consider using some of your tax refund to buy life insurance and ensure you and your family are taken care of in the event of an unforeseen tragedy.
Save for Your Children’s Education: Investing in your children’s education is important and there are several options out there that can help you save for their future tuition bills. Consider putting some of your tax refund towards a Registered Education Savings Plan (RESP) to ensure they have the funds they’ll need to pursue their educational dreams.
Diversify or Start Your Investment Portfolio: Investing in stocks, bonds and mutual funds can help diversify your financial portfolio and ensure that you have money saved for expensive, long-term goals. Consider using some of your tax refund to open a brokerage account or add to your existing investments.
No matter what you choose to do with your tax refund, these tips can help ensure that you’re making the most of this extra cash and setting yourself up for success in the long run. Smart financial planning is essential and having a plan in place now means that you’ll be able to move forward with confidence. From retirement to life insurance and investing in your children’s future, these tips can help you make the most of this once-per-year opportunity.
Best of luck!
