Your Tax Return!!!!!
What will you do with your tax return? Same thing as last year? Or something completely different……!
Your return may seem like a lot of money, but without a clear plan on how to save or spend it, it can become very little before you know it.
Tax Return: Woulda, Coulda, Shoulda, but Didn’t!
This time, this year, it will be different…namely,
- Wait until the refund amount arrives in your bank account before to spending a penny of it.
- Make a list of things you’ve been (needs vs. wants) for the past year and prioritize!
- If it’s not a house or a car, don’t use the refund as a down payment.
- This year, know what a TFSA is and possibly invest in it.
- Household maintenance and repairs will always add value to this important property investment.
- Investing in upgrading your skills through education is a guarantee to yield dividends of all kinds down the road
- And you cannot go wrong with doubling up on mortgage payments, even for a short time
Other meaningful options:
Treat yourself, but don't overdo it. For example, you might put 80% of it toward your debts and spend 20% on yourself.
Pay down your personal debts. Where the interest rate is highest (credit card debt is the most common), paying these debts with a tax refund greatly reduces your interest rate on the debt. If your personal debts are high, you’ll be hard-pressed to find a better use for your refund elsewhere.
Pay it forward. Your refund could turn into a charitable contribution (deductible on your 2013 federal tax return if you itemize deductions).
Invest in your health. Do you have dental work you’ve been putting off? Could you use a few sessions with a chiropractor or a massage therapist? Have you always wanted to get in shape with a personal trainer? Using your refund to invest in your body and your health is priceless, and can have a major positive impact on your life.
Your tax refund is actually money that should have been in your bank account all along, but you chose to lend it to the government for free instead. That means that while CRA held onto your cash for the past year, you missed out on the opportunity to put it to work for you by paying down your debt, earning interest in savings accounts, or investing for retirement.
With proper tax planning, you can better control your tax refund as well as increase your income during the year. Now small tax refunds of a few hundred dollars are nothing to worry about. However, with having to pay high amounts of tax, or, if you are receiving refunds in the thousands of dollars, you have been mismanaging your money in either case. A good financial planner is worth his or her weight in tax savings and wise investments. For more valuable information, visit www.prudentcreditrepair.ca