Income Tax Refunds

Make Your Income Tax Refund Count

As the deadline for filing your income tax approaches (sorry, we don’t make the rules), you may be looking past all of the forms, receipts, T4s, and so on, and thinking of the fun and exciting things you’ll do with your tax refund.

Well, as much as a dream vacation may seem like a worthy purchase, you might want to consider alternatives to make this year’s tax refund really count towards your overall financial security and wealth. Here are some suggestions to help make that happen. 

1.  PAY DOWN HIGH INTEREST RATE DEBT

Some retail credit cards and loans have punitive interest rates that may not seem like a lot each month, but they can really add up over time and put a big dent in your financial health. Paying down this kind of debt, or eliminating it entirely, should be among your top financial priorities.

2. START OR INCREASE YOUR EMERGENCY FUND

Without an emergency fund, just one surprising piece of bad news can send you on the debt spiral to financial disaster. Most experts say that your fund should have about six to eight months’ worth of savings in an easily-accessible interest-bearing account

3. GRAB SOME RRSPS

Yes, RRSP deadline ended just a short while ago, but there’s really no such thing as “RRSP Season.” It’s always a good time to invest in your RRSPs! And if you start contributing towards your maximum contribution amount now, you’ll benefit from compounded interest, plus you’ll avoid the last-minute stress when next year’s deadline looms.

4. INVEST IN YOUR TFSA

Remember, unused contribution limits carry forward indefinitely. So if you haven’t maximized your annual deposits since TFSAs first hit the scene in 2009, you can make those deposits right now (up to your current contribution limit). And while TFSAs don’t give you a tax deduction like RRSPs do, they offer you a reward that’s just as nice: your investment earnings are 100% tax free. Now that’s a formula for happy savings!

5. PAY DOWN YOUR MORTGAGE

While your home is your biggest asset – it’s also your largest debt. Finding ways to pay down your mortgage will certainly boost your wealth and put you closer towards the ultimate goal: mortgage freedom! However, keep in mind that some mortgages impose penalties for unscheduled additional payments. Please check your mortgage’s terms and conditions. Or better yet, regardless of whether your mortgage is with us or any other credit union, bank or financial institution, talk to us and we’ll be happy to help you get the answers and facts you need.

6. CONTRIBUTE TO AN RESP

Through the Canada Education Savings Grant and Canada Learning Bond, the Government of Canada can help you save for your child’s future education expenses. Plus, all of the investment income is tax-sheltered while it remains in the plan, which helps your savings grow even more. 

7. SPEND IT ON SOMETHING YOU NEED

Are you having car trouble, do you need a new winter coat or have you put off dental work? You need to take care of these essentials, and now that your refund is here, you can cover the cost.

8. INVEST IN YOUR CAREER

Getting a big promotion or shifting to a higher-paying career often requires developing new skills. Spend money on continuing education courses, a weekend conference or an online class to learn a new skill.

Admittedly, none of these options are as exciting as a dream vacation. However, by making your tax refund count this year, you can increase your savings, boost your wealth, and hopefully put yourself in a position to make that dream vacation not just a reality -- but an annual event! Come in and let our experts help you make your income tax refund count.

 

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