There’s a lot to love about tax refunds. So it’s definitely worth thinking about how to get the most bang for your tax refund buck. Surprisingly, most people don’t plan to head to the shops with their tax cheque. A survey by Finder shows one in two of us will save our tax refund. The remainder will use the money to pay regular bills, take a vacation or pay more off their home loan. Only one in 20 people will invest their tax refund.
So what’s the best way to use this windfall? A lot hinges on your personal situation. But if you have an outstanding credit card debt, you could save around 15 per cent in interest costs by using your refund to clear the balance. It’s not a bad idea to tip a refund into your home loan.
There are other ways to use the tax man’s refund. Like super for instance. Using the money to make a contribution to super may mean you can’t access the cash for quite some time. But last financial year, the median balanced super fund option delivered gains of around nine per cent. That’s more than double the returns on most savings accounts. And if you’re a low to middle income earner, adding to your super could see you entitled to a government co-contribution worth up to $500. Another option to turbo-charge your refund is using the cash to kick-start an investment portfolio. It’s not hard.
There is another way to use your tax refund that you may not have considered. And that’s to take action with emerging issues. I’m talking about things like getting the car serviced before a minor hiccup becomes a major repair. It could certainly help you save money.