Your tax return can often feel like free money, but it’s not – you’ve worked hard throughout the year to earn it.
Whether you’re a steadfast saver or someone who usually blows their entire tax return only to regret it later, there are several things you could do to make the most of your tax return.
1. Treat yourself
Setting aside some of your tax return to treat yourself could help you to spend the rest of it more wisely. Whether it’s trying out a new restaurant, buying a must-read book, or putting a deposit on a holiday, giving yourself permission to use part of your tax return on something you enjoy could satisfy any urges to spend. Then you could use the rest of your tax return on practical things without feeling like you’re missing out.
2. Top up your savings
With interest rates rising, adding to your savings account could be an attractive option. The Australian Securities and Investment Commission recommends having enough money to cover three months of expenses and your tax return could make a significant boost to your savings.
3. Pay down your credit card
Making extra repayments on debts with higher interest rates, like credit cards, could go a long way to reducing the amount of interest your pay. Paying off debt frees up your income so you can do more of the things you enjoy.
4. Make an extra home loan repayment
Consider making an extra repayment on your home loan so you’re ahead. How much extra money you add will depend on your situation, but even a small payment could help you to pay off your home loan sooner.
5. Pre-pay bills
Adding extra money onto bills such as electricity or your phone could help you to get ahead of price increases. Your gym or fitness class may allow you to pay for a few months in advance or you could take advantage of any discounted rates offered by buying classes in bulk.
6. Shopping spree
If your tax return is burning a hole in your pocket, channel your urge to spend by buying Christmas presents for your loved ones. Not only will you satisfy the need to go on a shopping spree, you’ll also set yourself up for less stress at Christmas time.
7. Invest it
Investing could be a strategy for using your tax return to set yourself up for future wealth. If you’re not already investing, ASIC’s Moneysmart website can help you to decide if investing is right for you.
8. Invest in yourself
If you’ve always wanted to do a uni degree, TAFE course, or learn a new skill, your tax return could help you get started. Investing in yourself is a great way to help you achieve your goal and can contribute to a sense of wellbeing – bonus points if the course is work-related as you could claim it as a self-education expense at tax time.
9. Share the love
You could use part of your tax return to show a loved one that you care. Whether it’s a coffee date, trip to the movies or a bunch of flowers, time with family and friends is never wasted.