So you are getting a tax refund and it feels pretty good. Should you not be celebrating? All a tax refund means is the government has had an interest free loan from you, and can you really afford to do that? I can't.
This is not found money, but if you are getting a tax refund, here are a few ways to put the money to use:
- Increase your retirement savings, helping you to secure a good future while reducing your tax bill next year is a win/win.
- If you have children, one of the best investments you can make in their future is by way of post-secondary education. Consider putting that money into an RESP.
- None of us know for sure when the roof will leak or you find yourself unemployed. If you don't have an emergency fund, start one with your refund. Some say have enough money to cover three-months. worth of living expenses. I suggest six months or maybe even a year. Err on the side of caution.
- Give to your favourite charity and reap the benefits of having a great tax deduction, while enjoying benefit of giving back.
- Consider replacing old appliances that are no longer energy efficient. A newer model could wind up saving you money.
- Make yourself more marketable by using the refund to take additional courses so you remain current and competitive.
- Thinking of a short-term purchase like a home? Save the refund and put it into a Tax Free Savings Account.
CTV's Chief Financial Commentator Pattie Lovett-Reid offers a financial tip of the day during the month of February for Your Money Month.