Tax season is upon us! Have you filed your taxes yet? Those that are fortunate enough to expect a tax refund will be pondering the question, “What am I going to do with the extra money?” Plans for the refund will depend on the amount expected, but for many Canadians contributing to RRSP’s and paying off debt is priority.
More than half of Canadians will be getting some type of refund this year and the average amount is usually in the $1,500 range.
The Canadian Imperial Bank of Commerce conducted an annual survey of Canadians’ financial priorities and found that paying down debt was cited as the top goal for 17 per cent of those polled, up from 14 per cent in 2011. Seven per cent said their primary focus is retirement planning, down from 13 per cent two years ago.
Those Canadians who plan to use a portion of their tax refund to make RRSP contributions will consider the following to divide the reminder of their tax refund:
- paying household bills, credit card balances, mortgages and other debt;
- saving for retirement or further investing ;
- travel and leisure;
- home renovations; and
- Build an emergency fund.
If you are prepared for a financial emergency, and are preparing to pay down a debt, consider the one with the highest interest rate, like credit cards and car loans, and then possibly against your mortgage.
Keeping in mind that tax refunds come but once a year, after you prioritize your financial needs, it would be a nice gesture to save a small portion of it to treat yourself. Life is short and all your hard work seems more worth it when you can experience little pleasures. Whether you find that pleasure in treating yourself and someone special, to a night out on the town, a new outfit for yourself or even a day at the spa, you should experience this when you can.
Before you spend a nickel of your tax refund, take note of your financial situation and what you have planned for the future. Prioritize what your immediate needs are, consider those down the line and don’t forget to live a little now and then. The point is you take the time to consider all the possibilities so you can make the best decision for you and your family.
For more information on how to manage your finances and budget please visit OCCA Consumer Debt Relief. We have helped thousands of Canadians get their finances back on track by resolving debt for over a decade. We are here to help..
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