In the coming weeks you’ll likely be doing your tax return with the prospect of getting back a nice little return to do something with. In 2015-16, the average tax refund in Australia was $2,574, so it may well be a nice little windfall. Here are some great things you could use that money for… the last one might be something you haven’t considered before

1. PAY OFF PERSONAL DEBT

Interest rates on personal debt, particularly credit cards, can make the eyes water. If you’re carrying around personal debts, paying a chunk off them can be a great quick win. Tip: Paying off a $2,500 credit debt being charged 20%, will save $500 in interest over 12 months.

2. PAY DOWN THE MORTGAGE

Your tax return could be equivalent to a whole month’s extra repayment on the mortgage. If you’re at the starting point of paying off your mortgage, a small lump sum repayment could end up saving you THOUSANDS of dollars in interest over the life of the loan. Tip: Keep access to the funds for emergencies by putting the money in an offset account.

3. GIVE YOUR RETIREMENT A BOOST

Yes, it would be great to spend the money on something for now, but a tax refund creates the perfect opportunity to put some extra money away to pay yourself with when the time comes to retire. Super is the most tax-effective way to invest your money and with time on your side, you could turn this money into a whole lot more! Tip: Get even more bang for your buck by using salary sacrifice to your advantage (just be aware that there are limits around how much you can contribute).

4. SPLURGE

While it’s vital to be planning for the future, it’s also important to live for today. The trick is getting the balance right. Depending on how big your return is, you can use some of the money to spoil yourself… after all, you work hard. Just be sure to using some (if not the majority) of your return for your future benefit.

5. INVEST IN FINANCIAL ADVICE

Have you considered this option? Your tax refund may be enough to pay for a financial plan that can help you work out the best way to get the best results in all of the areas listed above. Financial advice can show you ideas you may not have considered or have never even heard of. And if you choose to work with an INDEPENDENT financial adviser, the money that can be saved in commissions and on getting into low-cost super and investments will likely supercharge your financial future.

Your tax return isn’t free money, it’s your money and how wisely you choose to use it each year plays a part in what the financial future will look like for you and your family.

Cheers,

Daniel