Four Ways to Spend Your Tax Refund Money
As tax return money starts pouring in either via Canada Post or directly into your bank account electronically, it is the time of the year to take a moment to decide on what to do with your tax refund money. Today, let’s look at some simple options to help you decide on how to spend this money.
Invest – The decision is up to you whether to put in into an RRSP, TFSA, or simply a regular non-registered savings account. Each account type has its pros and cons and you need make an educated decision in terms of what type of account you use. Regardless of your account type, investing money is something that will benefit in the long run to achieve your financial goals.
Donate - Giving away something, whether money or time, for charitable causes is priceless and this is a must for lots of us. Also, the feeling you get doing something good for others stays there forever. If donating all is not an option, there are always other possibilities such as donating some part or a fraction of your refund money.
Pay-Off – Whether paying off mortgage, credit card balances, or other loans, this is another simple way to utilize your refund money for the long run. The recurring interest costs you will be saving for the life of the loan by paying it off today will really add up to a lot of savings.
Spend – Whether going on a vacation to Cuba, buying latest oversized TV, or catching up with the latest smartphone, we all have our reasons to spend. The immediate drawback of spending your refund in this category is that financially it offers no future value and, once spent, the money is gone for good. If you really need to spend, instead of spending the full refund, do a 50/50 or other split in between spending and anything else mentioned above.
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