There’s so much to celebrate – your taxes are done, and your tax refund is coming! It typically takes up to 2 weeks after filing to show up in your mailbox or bank account, or within 8 weeks if you mailed in your return.
While it may be tempting to go splurge on yourself, there’s definitely better ways you can use your tax refund. Canadians are generally very responsible when it comes to spending that extra money. Almost 36% plan to use their refund to pay down or pay off an outstanding debt, while 32% intend on keeping it for a rainy day, and 16% will spend a portion and invest the rest.
Whatever way you choose to go about it, you should always try to make the most out of our tax refund. We’ve put together a list of the 10 best ways you can spend it.
1. Learn a New Skill
We’ve all heard the phrase ‘learning never stops’ and have at some point or other committed to pursuing it. Whether it’s a taking up a short-term course or a semester long class, learning aids personal development, which can lead to bigger and better opportunities. Why not put your tax refund towards learning something new this year? There’s a wealth of options out there, from traditional in-class short term courses to a mind-boggling range of online classes you can attend and learn more about practically any subject matter out there. And, with changes to the tuition credit, you may even get money back next year for improving your skills!
2. Pay Down High Interest Debt
If you’re carrying some debt, there’s a fair chance that you’re paying interest on it too. Using your refund to pay down or pay off your debt or loan makes far more sense than leaving it in your account or spending it towards an unnecessary expense. Consider using your tax refund to reduce or eliminate your credit cards balances, student loans, or car loans.
3. Invest It
You can make your money make more money but simply putting your tax refund towards an investment. You have a lot of options to choose from, such as the Registered Retirement Savings Plan (RRSP), Registered Education Savings Plan (RESP), Tax-Free Savings Account (TFSA), or the stock market. These are great financial planning
4. Take a Vacation
Now this might not come across as a ‘smart’ way to spend your refund, but studies have shown that travelling can prove to be an investment in yourself. Travel lowers stress levels, can boost your immune system, improves brain health, keeps you fit and can also potentially increase your life expectancy.
5. Start or Increase an Emergency Fund
Many Canadians do not have adequate savings that they can access in times of sudden financial needs. Without an emergency fund, you’re left vulnerable in the event of a job loss, medical emergency, major repairs, or other surprises. Use your tax refund to start or add to an emergency fund, so you’ll have peace of mind should anything unexpected happen.
6. Make Home Improvements
Renovations aside, there are several ways to improve your home that will actually pay off in the long run. Replace loose windows and doors, add insulation, or switch to energy efficient appliances to save on your bills. New fixtures can also yield more of a return and increase the appeal of your property if you decide to sell it.
7. Donate to Charitable Causes
You might have put off your donations earlier if you were living on a budget, but your tax refund gives you a chance to give back. Each donation can make a huge societal impact, and even though the returns aren’t as apparent or immediate, giving to charity benefits the entire society, and is also tax deductible for your next return.
8. Launch a New Business
You don’t need millions to launch a business, nor do you have to quit your job to do it. Many successful businesses started off on a shoe-string budget, fueled by passion and desire to get the idea out in the market. Use your tax refund to buy inventory, set up a website, take a business course, or pay for advertising services you’re already good at. It’s never too late to turn your hobby into an enterprise.
9. Get Something You Need
If you’ve been holding off on a major expense because of tight budgets, a tax refund is the perfect method to cover the costs of it now. Use the extra cash to pay for auto repairs, dental work, essential purchases or anything you’ve been avoiding because of the bill. If you really need it, this is the perfect time and way to pay for it.
10. Get Something You Want
You’ve earned it, haven’t you? You saved up all year, diligently stuck to your monthly budget, and avoided all the tempting sales – this is your chance to splurge and enjoy. Don’t feel guilty about indulging in a little bit of retail therapy, but don’t get carried away either. A nominal refund in no excuse for a massive shopping spree.