/ Finance 101

How can you make your tax refund work for you?

It’s tax season!

Ok, normally taxes don’t garner that much excitement, but you know what does? Tax refunds. Who doesn’t like reclaiming some of the extra money they’ve paid the government throughout the year?

It can be tempting to use your tax refund to buy yourself that great purse you’ve been eying, or to splurge on a weekend trip, but wait a minute. Before you go spending the money on something frivolous, why not make your tax refund work for you?

How, you ask?

Stick it in your RRSP

Come February of next year you may find yourself scrambling to find the money to make your annual RRSP contribution. Wouldn’t it be so much easier if there was already a nice little nest egg waiting for you to use?  Bonus, if you make an RRSP contribution, you’re more likely to see a refund on next year’s taxes, so the cycle can continue!

Pay off your debts

We all know that debts can follow you around like a shadow, and interest accumulates quickly. Sometimes you find yourself paying more in interest than what the initial purchase cost. So why not use this extra pool of money from your taxes to get rid of some debt, and therefore reduce the amount of interest you’ll ultimately end up paying? You’re saving yourself money in the long run, and also helping your financial future by likely improving your credit score.

Invest in you

The one person we sometimes neglect when it comes to investing is ourselves. Is there a course you want to take, or a professional designation that may help to boost your career to the next level? Use your tax refund to invest in yourself, and you’ll see the investment pay off big time.

Invest in your children

If there aren’t any educational or professional opportunities that appeal to you, consider putting the money into an RESP account for your children. The government will match a portion of your contributions, so take advantage of what is essentially free money from the government!

Improve your home

Making improvements to your home ultimately protects your investment, and can potentially help make your home more valuable in the long-run. If you need a new furnace, or are ready for a new roof, consider using your tax refund to pay for the improvements.

While not all of these ideas are as fun as a weekend trip, or as flashy as a new bag, if you’re smart about what you do with your tax refund you’ll reap the benefits all year round. And ultimately, that’s far more enjoyable.