Are you one of the many Canadians receiving a tax refund this year? Noticed how I did not say one of the lucky ones. What you did was give our government an interest free loan of your money for the year. Oh well that really isn’t the point of the article this month. This month we want to discuss what should you do with the money you are getting back.
Now if you are like one of my clients that is only getting $43.00 back, then the choices of what you can do with that money will be limited. So maybe it is dinner out at one of your favourite fast food places.
For a lot of Canadians, the average refund is around $1,500. This may appear to be like a big windfall, even though you are just getting back some of your own hard earned money. The question then becomes, what to do with this sudden bit of wealth. It is easy to think of going on a mini vacation; shopping spree; an extravagant night on the town; or spending it gambling, either lottery tickets or casinos to try and increase your wealth. Ok maybe these are not the wisest things you could do with your money. What would be a good way to try and get the biggest bang for your refund?
I would like to give you some suggestions that will hopefully help you to make a financial difference even if on the surface you believe that you could have more fun doing some of the above. Here goes, not necessarily in order of importance: Pay down credit card debt; make an extra payment on your mortgage; pay down line of credit; add to your RRSP or TFSA if you have room; add to a RESP if you have one set up; renovate or do some household project which will add value to your home; donate to a worthwhile charity; or start or add to an emergency fund.
When you think about it there are lots of worthwhile things you can do with the money. You really just need to take the time to decide where the best use of this refund is, for you and your family. The suggestions I have made should stretch the refund in the long term for bigger benefits. Your decision in the end so make it a great one for you.