It’s estimated that the average working Australian will receive a $2,464 tax refund this financial year, according to the Tax Office, and there’s no doubt that some of you are already thinking up some pretty sexy ways of spending that cash.
But interestingly only a small number of people admit to actually using their tax refunds for holidays or to splash on must have shopping items.
Typically most people use their tax refund to pay bills or save the cash for a bigger money goal, according to the Australian Securities and Investment Commission’s Money Smart website.
So if you suddenly find yourself a couple of thousand dollars richer what should you do with it?
Frankly, nothing is sexier than a woman in control of her own money. So here are some of the best ways to spend, invest or allocate that extra cash.
Buy shares. It’s commonly said that investing in quality high paying dividend stocks is the way to go. But if that means absolutely nothing to you, then it’s really time to do your own research and consider getting some advice on the best stocks to buy as this will also help you understand how much risk you are willing to take.
Save towards a money goal. Given low interest rates, the interest that can be earned in a savings account isn’t as high as it use to be before the financial crisis. But the best term deposit rates at the moment are around 3-plus per cent. The thing with parking money in a savings account is that you are growing it until such a time that you intend to withdraw it to use on your money goal, be that property, a car, travel plans, or just for that rainy day.
Smash credit card debt. It goes without saying that paying down the credit card bill can significantly reduce monthly interest charges and penalties. And hopefully wipe them out altogether.
Pay down the mortgage. If you can put this money off the home mortgage, then you will not only be paying less in interest charges (depending on the size of your loan and payment made) but you will have the feel-good experience of seeing the balance come down a little on a major asset.
Pay off university debt. This is definately an option, but let’s be honest if you have a debt outstanding on your studies, the chances are that the Australian Tax Office is probably going to take your refund towards this debt anyway.
Start up your emergency kitty. Financial advisers recommend having about three months worth of outgoing expenses covered for unforeseen events that might stop you earning an income. Add an extra $7,000 per child or pet to cover them for unexpected medical bills.