What You Should Do With Your Tax Refund

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This post is all about what you should do with your tax refund.

By now, most of us have received their tax refund. Many people believe that if you are getting a tax refund back, you essentially gave a loan to the government. To be honest, I’d rather get money back from the government than owing an amount. When you receive a big amount back from the government, this seems very tempting to spend. However, being smart with your tax refund money makes all the difference in your financial freedom journey.

Be Grateful & Thankful

First of all, I do believe that showing gratitude to the universe is the first thing you should do after having received a tax refund. You should do it every time you receive money or great opportunities and oftentimes we do not express enough thanks to the universe. Remember, that the more money comes into your life, the more money comes into your life. Like attracts like and the same goes for money and abundance.

Use Your Tax Refund To Pay Off Debts

You can always use your tax refund to pay off your loans, such as car, students or home loan. You can even pay off your credit cards which is a wise thing to do as credit cards have one of the highest interest rates.

Use Your Tax Refund Towards Savings

If you get back a big chunk of money wouldn’t this be the best opportunity to start saving for something big?
Think of maybe a down payment for a house, a car, or whatever it is that you need. Your tax refund money can help you here a lot.

Use Your Tax Refund To Start Investing

Maybe this is the time for you to use the money and start contributing a lump sum towards retirement savings – IRAs (U.S.) and RRSPs (Canada) namely. You can put that money to work. What about putting that money into a TFSA (Canada) account? You could venture into the market and start investing. Your tax refund money can be the cornerstone of starting to invest your money. Make sure you always talk to a financial adviser if you want to seek professional advice and do not listen to the people of the internet 😉

Use Your Tax Refund To Start Your Emergency Fund

You could kick-start your emergency fund and start saving for a rainy day with your tax refund. If you get back a good chunk of money that really motivates one to keep it in a safe place. Let’s not forget that emergencies do happen and the average person in North America is not equipped to pay for sudden, unexpected emergencies.

Use Your Tax Refund To Start Your Baby / College Education Fund

If you are a new parent it would make a lot of sense for your family to start a baby fund or college fund. There are many investing tools that defer taxes while growing inside these investments. An example is the 529 in the U.S. or the RESP in Canada. Once you have given birth you can open the account in the name of the child and can start putting money away that way. When you receive your tax refund this would be another great idea to use the money.

Final Note

Whatever it is you are planning to do with your tax refund, please make sure you are not wasting it by buying things you don’t need. Don’t run to the mall immediately and give your money to that big company. Instead, use it to invest in yourself. If you are planning to invest your tax refund in stocks or securities, or any other financial products, please make sure you educate yourself on the topic of investing. It is important to seek a financial adviser, as every case is very different.

This post is all about what you should do with your tax refund.

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WHAT YOU SHOULD DO WITH YOUR TAX REFUND