It’s tax time! Use your tax return to get ahead, reduce debt or treat yourself, if circumstances permit.
Pay off your loans
It’s not as exciting as a shopping spree but it’s a smart move to decrease or eliminate debt. Use your tax return to get your loan repayments down or pay off the last bit of that student loan.
Eliminate credit card debt
According to moneysmart.gov.au the average debt per Australian credit card holder is $4,800. This means the average card holder is paying about $800 in interest each year if their interest rate is between 15 to 20 per cent. Reducing your credit card debt should be your number one priority if you are in this boat.
Invest in shares to make a long-term gain, open a fixed-term deposit account, get into property, or activate a hedge fund. Of course, it’s recommended you seek the guidance of financial advisor first.
Boost your existing nest egg or use your tax return to open a savings account. Shop around for good interest rates and ensure the savings account does not require any fees. ING Direct offers a range of high interest savings accounts with no monthly fees or withdrawal fees, and no fixed term or minimum account balance.
Most financial advisors recommend saving at least three months of your salary for when things could go wrong — perhaps your car breaks down, you have an emergency medical problem or you are unexpectedly made redundant. Your tax return is a smart way to create a safety net for unpredictable events.
Pay your car registration or insurance
If your car registration or insurance is due to be paid around tax season then this is an excellent way to stay on top of some costly annual expenses.
Add value to yourself
Help yourself make more money in the future. Use your tax return to purchase a certification course in your field or an industry membership/accreditation that will complement your experience. You may be able to afford an evening class or online course which could make you more attractive to employers when applying for a new role or promotion.
Pay for repairs
Maintaining expensive possessions now will mean saving money down the track. Replace those balding car tires with new, safe ones or fix that leaking roof before it becomes a bigger problem.
Give back to yourself
Investing in your emotional and physical wellbeing could be a wise use of your money. Whether you choose to sign up for a gym membership, join a social club or enrol in a weekend cooking class, you’ll quickly feel the impact of this self-investment.
You’ve worked hard all year, made sacrifices and your finances are in order so there’s no reason why you can’t spend a portion of your tax return. Just ensure that you are mindful about your purchase to avoid being frivolous with your money. Experts say buying experiences are always rated as more fulfilling than an item — consider a family vacation, a day trip with your loved one or dinner with the girls.