How to get the most out of your tax refund this year and beyond
It is officially tax season. Will you be receiving a tax refund this year?
Here are some smart ideas to consider before spending your tax return on non-essential items.
You have been working hard, and anything you get back in tax is a bonus, so why not put that bonus to work?
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 bad 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.
Add to your super
Using a tax refund to grow your retirement savings is also a smart move. Many households worry how they’ll maintain their standard of living in retirement. Given the power of compounding interest, the more you contribute now to super the more you’ll have for retirement.
Even small extra contributions to your account can make a big difference to the size of your super balance at retirement.
Save it
A tax refund is a great opportunity to establish or bolster your emergency savings. Some people have reserves to cover a few months of expenses. Even having a small stash of cash can help you weather life’s unexpected events or outlays.
If you just leave your tax refund in a transaction account, it's too easy to dip in, 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.
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The information contained in this article does not constitute financial product advice. REI Super does not give any warranty to the accuracy, completeness or currency of the information provided. Although REI Super makes every reasonable effort to maintain current and accurate information, you should be aware that there is still the possibility of inadvertent errors and technical inaccuracies. REI Superannuation Fund Pty Ltd ABN 68 056 044 770, AFSL 240569, RSE L0000314 Trustee of REI Super (ABN 76 641 658 449), SPIN REI0001AU, RSE R1000412. MySuper unique identifier 76641658449129. May 2022.