The Learning Centre:
Here are 4 ways to maximize the return on your tax refund.
Expecting a tax refund this year? Now it’s time to make that hard-earned money work just as hard for you.
Educators Financial Planner Kola Deru offers up a few smart ways you can use this year’s refund:
1. Pay down high-interest debt. Use your refund to tackle high-interest debt like credit cards, lines of credit, or car loans. If you’re looking to be mortgage-free sooner rather than later, use your refund to make an extra mortgage payment instead.
2. Help your kids save for their post-secondary education. As an educator, you know better than anyone about the rising costs of education. One of the ways you can help ensure your child’s future is to use your tax refund to make a lump sum RESP contribution.
3. Save it for the summer. If home renovations or a trip abroad is on your summer wish list, you might consider putting your refund into a tax-free savings account (TFSA). This will allow you to grow your money tax-free until you need that extra income boost. If you’re retired, that extra money in your TFSA can help cover emergencies or any potential pension income gaps.
4. Use it for next year’s RRSP contribution. Get a head start on reducing your tax liability for 2016 by putting your refund towards next year’s RRSP. Not only will you be avoiding the last-minute contribution rush next March, it just might help you get a refund again next year!