5 Best Thing you can Ever Do With Your Tax Refund
Are you due a tax return? It’s strange, but even when we expect to get a refund from the tax man, the amount of forms and paperwork involved can put man people off. Of course, many tax experts will advise that your financial affairs should be streamlined so that instead of the tax refund once a year, you are simply paying the right amount of tax in the first place- why give the government an interest-free loan? Regardless of strategy, when you have a tax refund on the way to you, the worst mistake you make can be not having a plan for how it will be used.
Get rid of debt with your tax refund
No, it’ not glamorous, but it will be one of the best things you could ever do with your tax refund. High interest loans like credit cards should be paid down as much as possible, allowing you to save a huge chunk in interest every year. In the end, your simple tax refund will save you hundreds and hundreds of dollars in paid interest down the line. (Check this site for more information : taxreturnco.com.au)
Create your emergency savings
If you have no significant debt to pay down, then consider using your tax refund to ensure you are never forced to get into debt by creating and emergency fund. In emergencies, you will have the peace of mind of knowing you can cover any immediate bill. This will save you from drawing on retirement savings or having to go into debt. It’s a good target to aim for 3 months’ salary [or three months living expenses] in your emergency fund.
Pad your retirement
If you’ve managed to get both of these other scenarios sorted out without the help of your tax refund, then why not strengthen your financial position some more and look at a retirement savings vehicle for your money to sit in? If you don’t already have retirement savings, this part is absolutely critical. Click here.
Invest the rest
If your tax refund can’t be used sensibly towards any of these other goals, then you can start looking at investment vehicles that suit your risk profile. Whether that’s property or equity, or even paying off your mortgage, the money will serve you well placed in an investment vehicle to aid growth and ensure future financial prosperity.
Start college funds
If you’re planning on having kids, or have kids already, you’ll know that student loan debt is a killer at the moment. By starting saving early for the tuition bills they will face, compound interest and time will help grow that amount for you.
Of course, none of these strategies sound glamorous, like a holiday or new TV would. However, it’s next to impossible to overstate the relief that financial stability can bring you over time, knowing you can handle emergencies without issues or panic. Choose a financially sound option for your tax return, and you will be reaping the many benefits for years to come.