Five smart ways to spend your tax refund

You've completed your tax return and you're getting a refund this year, but what should you do with that money?

Whether it's a small windfall or a substantial sum, how you choose to utilize your tax refund can have a significant impact on your financial well-being. To help you make the most of this extra cash, our financial planning experts at Avail Wealth have compiled five effective strategies to maximize the return on your refund.

1) Pay Down High-Interest Debt

One of the most commonly recommended strategies for using your tax refund is to pay down high-interest debt. Reducing or eliminating debt can provide immediate financial relief and save you money on interest payments in the long run. Start by targeting debts with the highest interest rates, such as credit card balances or personal loans, to make the most significant impact on your financial health.

2) Boost Your Savings

Another smart way to utilize your tax refund is to bolster your savings accounts. Whether you're focused on building an emergency fund, saving for a major purchase, or planning for retirement, allocating a portion of your refund to savings can help you reach your financial goals faster. So whether it's to cover unexpected expenses, achieve long-term financial security, or both, a savings boost is a smart play with your return.

3) Invest in Your Future

Investing your tax refund can provide an opportunity for long-term wealth accumulation and financial growth. Consider contributing to tax-advantaged accounts such as Registered Retirement Savings Plans (RRSPs) or Tax-Free Savings Accounts (TFSAs) to maximize the benefits of your investment. And just like our wealth management experts at Avail Wealth do, we recommend diversifying your investment portfolio to minimize risk and optimize your returns over time.

4) Focus on Personal Growth

Investing in yourself is one of the most valuable investments you can make. Use a portion of your tax refund to further your education, develop new skills, or pursue personal interests and hobbies. Whether it's taking a course, attending a workshop, or investing in professional development opportunities, investing in personal growth can enhance your earning potential, expand your horizons, and enrich your life in meaningful ways.

5) Treat Yourself

While it's essential to prioritize financial goals, it's also okay to indulge in some well-deserved rewards from time to time. Set aside a sensible portion of your tax refund for guilt-free spending on experiences or items that bring you joy. Whether it's a weekend getaway, a new gadget, or a special treat, allocating a small portion of your refund for discretionary spending can help you maintain balance in your personal and financial wellbeing.

Questions?

If you have any questions about this article, what to do with your tax refund, financial planning, or any of our other related services, please contact our Avail Wealth expert, Tyler Brack, or complete the contact form below.