Posted on Thursday 28 January 2016
Every year, Canadians from all cities, await that glorious tax refund. Passionately planning ways to enjoy money they didn't have before. However, what is the wisest way you can take advantage of your tax refund this year?
Don't you think you'd be far better off putting your tax refund to work for you and possibly giving you long-term satisfaction, versus that instant gratification you crave?
The wisest thing Canadians can do is take their own personal financial situation into account and plan accordingly.
There is absolutely no reason for anyone to allow their refund to burn a hole in their pocket--it's just not smart, and it keeps Canadians caught in a trap. So, the goal is to treat the refund check the same way you would treat any other check.
Come up with a plan or just save it. Some find investing their refund into a mutual fund or a money market account is more worthwhile than letting it sit in a checking account.
Some find other ways to collect interest on it. In order to benefit for the long-term, you should put your tax refund into an interest yielding account you can't access for a specific period of time. That's the best way to go. This will encourage savings versus overspending.
Let's continue on and share some amazing ways you can stack and save that infamous tax refund you might not have been expecting.
You can never have too large of a nest egg, or emergency fund--and the more you have the more peace of mind you're going to have as well. Your goal should be to reach at least 8 months of emergency savings. You never know what can happen in life and this will give you little extra cushion. If you don't ever need it, then great, but that just means you can accrue more in the long-term.
If you invest in the things that you need you'll save far more money in the long-term, and you'll have more to play with when you want to relax and unwind! Remember, it's all about thinking smart and spending smart.
If you put some of your tax refund into a tax sheltered account you can move ahead on items such as: RRSP contributions or even college savings plans! This allows you to claim a tax deduction, ultimately giving you more money back in the long-term. Bear in mind, this type of investment is dependent on your income level, your age and your individual goals as well. This is definitely worth looking into.
If you donate to a charitable cause not only will you feel fulfilled, you'll also be able to claim that donation on the next years tax return; but this isn't why you should do it either. While you donate to feel good, taking advantage of the many tax breaks for doing so really fulfills your bottom line financially.
Why not turn a business idea into a life-time of income? Starting up your business venture is a wise move, and what better to use your tax refund on? The right business venture can bring you long-term income and can definitely help you learn how to start planning and preparing for your financial future far better. Many new business entrepreneurs see this as their baby, and want to have it succeed.