ME look at simple ways to put this year’s tax refund to good use.
How good is tax time? In exchange for a few hours filling out your tax return, you could receive a handy refund. And with a bit of planning, you could make your tax refund go a lot further.
Receiving any lump sum of cash can make a spot of retail therapy look very appealing. But there's a whole range of clever strategies that can help you make the most of your tax refund. Try one – or all – of our suggestions below to maximise the value of this year’s tax refund.
Add to your super
Using a tax refund to grow your retirement savings is a smart move. Given the power of compounding returns, the more you contribute now to super the more you’ll have when you retire.
If your other half is a low-income earner, consider using your tax refund to make a contribution to their super and you could find yourself eligible for a tax offset worth up to $540.
Reduce debt stress
Paying down debt is a great strategy as it reduces an ongoing cost, freeing up your monthly budget. Start with higher rate debt first, like credit cards.
While a home loan has one of the lowest rates of any type of debt, it’s also a long-term affair and any lump sum you tip in today can knock years off the term and save you a bundle in interest along the way.
A stitch in time
A tax refund can also be used to pay for minor repairs before they turn into much bigger expenses. Maybe a thorough service for your car, some much needed dental work, or even something like repairing those broken roof tiles before they become a major liability in the next storm.
A tax refund is a great opportunity to establish or bolster your emergency savings. Ideally you’d have reserves to cover at least six months of expenses. But even having a small stash of cash can help you weather life’s unexpected events or outlays.
A tax refund can also be a good opportunity to maintain assets like your home, car or health – by servicing your car or going for a medical check-up, for instance – which can postpone bigger expenses in the future.
If you just leave your tax refund in a transaction account, it's too easy to dip in to, even unintentionally, for non-essential expenses. Consider locking it away in a separate savings account or term deposit to help you achieve your savings goals.
Remember, a tax refund is money that you haven’t already factored into your household budget. That makes it easier to use the cash to improve your financial wellbeing, and even a small tax refund can make a big difference to your wealth when it’s used wisely.
This article is brought to you by ME.
This information is about products and services available to you as a member of Tasplan Super. Tasplan Super and ME are not agents or representatives of one another. Tasplan Super does not accept responsibility or liability for any loss or damage caused by the products or services provided by ME. Tasplan Super does not receive any commissions as a result of members using ME products and services.
The trustee of Tasplan Super (ABN 14 602 032 302) is Tasplan Pty Ltd (ABN 13 009 563 062). AFSL 235391.