How to Use Your Tax Refund

By Randall Orser | Personal Income Tax

The height of tax season is here, and many Canadian taxpayers are preparing to get large refund cheques. The average Canadian tax refund is about $1,400. Have you filed your tax return yet? Here’s eleven best uses in order to maximize that tax refund.

Pay Off Debt

If you’re finding yourself in debt for credit cards or student loans, it can make your life miserable. If you’re debt load has gotten out of hand, that’s especially true. You can wipe out financial stress and anxiety by using your tax refund to pay down this onerous debt.

Save Your Money

Do you have enough set aside for emergencies? Canadians barely have $1,000 set aside for such expenses. Use your tax refund to start your saving for a rainy-day fund, particularly if you have a difficult time saving.

Take a Vacation

Have you been thinking about that dream vacation, such as a cruise or a European trip? Your tax refund can make that a reality. Your tax refund may not be enough to pay for the whole trip, however, you can probably make a sizable down payment on that dream vacation.

Investing

It’s never been easier than today to start investing. The best part is that you don’t have to pay a broker. You can learn about investing online and create a self-managed account that will allow you to buy and sell stocks any time. 

Put Money into Your RRSP

The perfect time to start your RRSP is now. Even if you’re young, you should make decisions today that will benefit your future. Funding your retirement account takes discipline and consistency. When it comes to your retirement, you’ll be very happy you made the effort now.

Spruce Up Your Home

Does your home need a bit of a makeover? There are economical things you can do to your home to improve it. You can paint, plant a garden, or buy new furniture. With small improvements you can enhance the look and feel of your home.

Start a Business

A smart way to use your money is to start a business. You could quite possible make your dreams a reality, but also create an additional stream of revenue for your family.

Fund Home or Auto Repairs

Have you been putting off any home or auto repairs? That tax refund could go to new brakes, a tune up, broken window, or replace missing roof shingles.

Update Your Work Wardrobe

You’re not Steve Jobs so you probably can’t get away with wearing the same thing every day. Nor do you have to look like a fashion model. You should have clothes that are professional, if you want to advance in your company, you should be paying attention to your professional image. You can use your refund to buy new shoes, dresses, suits, and business casual attire.

Start a College Fund for Your Kids

College is expensive, and the average college student ends up with tens of thousands of student loans. For someone who’s just entering the workforce, that’s a lot of debt. You can make your kids’ graduation a happier time, if you save a portion of your tax refund for them.

Treat Yourself

While it’s important to pay off debt or start a savings account, you should maybe enjoy some of the finer things in life your money can buy. Treat yourself to something special you’ve always wanted with your tax refund. Be it a new fragrance or handbag, buy something that’ll put a smile on your face.

Your tax refund could change your financial picture. It’s crucial that you spend it wisely.

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About the Author

President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.