What are you going to do with your tax refund?
Perhaps you are one of the lucky ones who will be receiving cash back after filing your tax return. To make the most of this windfall (no matter how small!) plan ahead.
If you’ve not done so already, register your tax return to come to you under direct deposit. Even if you’ve already filed for next year, put this convenient step in place for next year. No waiting for your cheque- so you can get moving on your plans with the cash.
There are numerous options available to you, but here are a few good suggestions.
High Interest Debt
If your current goal involves the paying down of debt, use your tax return to put a lump sum on higher interest debt. This can really accelerate your pay-off plan in a couple of ways. Not only are you making a larger payment than usual, reducing your debt, you are reducing the amount of interest you will have to pay out over time.
Lump sum mortgage
Your mortgage likely allows you to pre-pay a lump sum once a year without penalty (depending on your lender). This would also be a good spot to direct your return.
Remember the frantic days of February where you (and everyone else you know) scrambled into the bank at the last minute to make an RRSP contribution (which may have helped you generate your current surplus in your return)? Avoid the lineups and the stress and contribute now.
Updating and renovating your home is always a good idea (if you can afford it) because it will preserve and increase the value of your home over time. The best spots to get bang for your buck? The kitchen, bathroom and master bedroom are the three hot spots that will get you the best return on your investment.
If you’ve been really good about keeping to your financial plan, keep a small chunk aside to treat yourself. Take the family out for a nice meal or weekend getaway. Treat yourself to a spa day or to a new outfit. A small reward can go a long way to helping you stay on track for the rest of the year.