Are you expecting a tax return? Good for you!
Here are a few ideas to use this money wisely rather than spend it.
1. Contribute to your RRSP
Reinvest this money in your RRSP to get a tax return again next year.
2. Pay off your debts
Don’t let your debts pile up – pay them off as soon as possible, especially those with high interest rates, like credit cards.
Not paying interest will save you a lot of money!
3. Create an emergency fund
Put some of it away for a rainy day. It’s a good idea to have enough to cover your household expenses for 3 to 6 months.
The TFSA is perfect for this because your return is tax-free.
4. Support a good cause
Give to a charity. In addition to helping a good cause, you will get tax credits.
Just make sure the charity is recognized by the government.
5. Invest in property
Pay down your mortgage or save up for a down payment.
6. Save it for major expenses
Municipal taxes, new tires, trips, roof repair… these are all expenses you should budget for rather than go in debt for.
So, why not use your income tax return money to pay for all kinds of major expenses?
It’s always better to finance your projects yourself rather than finance them using a personal loan or line of credit.
That way, you avoid having to pay back that amount with interest.
7. Renovate your home
Bring out your inner DIYer while increasing the value of your home, by renovating or updating your:
8. Start an RESP for your children
Save up for your children’s studies by starting a registered education savings plan (RESP).
In addition to receiving contributions, beneficiaries receive educational assistance payments (EAP) from the federal and provincial governments.
For more information, consult the Canada Revenue Agency site.
9. Take advantage of your employee benefits
Invest your income tax return in your employer’s pension plan or stock options program.
This is a great idea especially if your employer matches your contributions, in whole or in part!
10. Update your appliances
Get energy-efficient appliances to save on your electricity bill.
Calculate your appliance’s lifetime energy cost here: Natural Resources Canada.
Note: This blog post is provided for information purposes only. It is not a substitute for professional legal, financial or fiscal advice. For advice specific to your personal situation, always speak with your advisor. SSQ cannot be held responsible for any decision made as a result of reading this blog post.