Are you expecting to get a refund from tax return this year? While there are countless ways to use that extra cash, a plan to spend it wisely can pay off in the long run. Here are a few ideas on what to do with the money you may get:
Pay down your debt
The interest you pay on debt, such as what you owe to credit cards and loans, can really put a dent in the money you have available. Pay off your debts with the highest interest rate first to save more money in the long term.
Set up an emergency fund
An emergency fund can help you pay for unexpected expenses without using credit. Unexpected expenses could be repairs to your car or home, an urgent visit to the veterinarian or a loss of income.
The general advice is to save up an emergency fund equivalent to three to six months of your living expenses, but any amount you can save up helps.
Set some savings goals
Paying down debt is often a priority because the interest rate on what you owe is usually higher than what you can earn by investing. But you may also have other financial goals to work towards. You might be looking to buy a new home, make upgrades to your current home, take a vacation or pay for post-secondary education. It can be easier to sort out a realistic savings plan using an unbiased tool like the financial goal calculator from the Financial Consumer Agency of Canada.
Find more money management tips and the calculator at canada.ca/money.