A great day has arrived; your tax refund is here! Good on you, because you took advantage of tax credits, you contributed more money to your Registered Retirement Savings Plan (RRSP) and you claimed the GST/HST rebate this year.
Now the vexing question – what on earth do you do with the money?
Instead of rushing out and buying that expensive new tech toy or blowing everything and maybe a bit more on a vacation, consider these alternatives or any combination of them to spend your tax refund wisely.
Pay off credit card debt
Yes, maybe boring, but the sooner you rid yourself of consumer debt the sooner you can enjoy the money you make. The money you don’t have to pay others is the money you can keep for yourself. Then maybe you can take that trip.
Save for retirement
Financial article after article tells us we aren’t saving nearly enough for retirement so consider using your tax refund to pay for your future self. Saving for tomorrow is not only smart but if you sock some or most of your tax refund into your RRSP, you’ll be well on your way to getting an even bigger tax refund next year.
Start an emergency fund
When you least expect it, the car will need new brakes or the air conditioner won’t work this summer. Instead of putting these emergencies on credit use your tax refund to build up a small emergency fund to plan for the unplanned. Even just $1,000 stashed away is far better than having no money at all when you need it most.
Make an extra mortgage payment
Making just one mortgage prepayment you’ll likely reduce the interest paid over the life of your mortgage by thousands of dollars.
Invest in you
Want to improve your skills for the workplace? Want to turn your hobby into some side-income? Want to start a blog? Consider using your tax refund for a workshop or course to improve or learn new skills. Investments in you are always worthwhile.
Don’t take the tax refund and run. Consider these alternatives to use your refund wisely and make 2014 a brighter year.
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