What To Do With Your Tax Refund This Year
Most Australians do not budget for their tax refund, leaving them will a small cash bonus around July every year. Investing this money wisely is an easy way to help set yourself up financially for the future.
In this article, we share 8 smart ways to use your tax refund this year.
- Pay off high interest debt & consolidate your loans. Credit cards and other forms of unsecured finance can attract interest rates of more than 20%, whereas personal loans sit closer to the 7% mark. You can save immediately on future interest by paying down the balance on your credit cards or personal loans. If you have multiple cards or personal loans, it might be in your best interest to combine these into a single loan. Not only will you reduce the number of monthly payments you have to monitor, you’ll also most likely benefit from a lower overall interest rate.
- Deposit it into your mortgage offset account. Depositing your refund into a mortgage offset account reduces your home loan interest immediately, whilst leaving the cash available for you to access if required. Don’t have an offset account? Speak with Lendfin about refinancing your home loan to find a loan structure that works better for you.
- Start a high interest savings account. High interest savings accounts are available with some major banks and online institutions. Deposit your tax refund into a high interest account for a rainy day and watch your savings grow.
- Make additional super contributions. Additional superannuation contributions have a snowball effect, growing exponentially over time. Investing your tax refund of just $1,500 this year could give you tens of thousands more in your superfund at retirement. We recommend speaking with your accountant or tax adviser before making voluntary contributions to ensure that it does not exceed the allowable limit.
- Make home improvements. Tax time can be a good opportunity to make minor improvements and increase the value of your property. You may consider taking a small loan to cover the remaining amount needed to create your dream home.
- Start an investment fund. Investing your extra cash is a great way to grow your net worth over time and set yourself up for the future. There are so many different investment options that we highly advise speaking with an expert before getting started, to make sure that your investments are suitable for your goals and risk profile.
- Invest in your career. Career related training can lead to a better job or higher salary in future, and in certain cases the cost can be claimed as a deduction in the following year’s tax return.
- Start a business. Most small businesses require some form of investment to get off the ground, from a simple website to heavy stock and equipment. Your tax refund can be used to get the business off the ground, and you may wish to obtain extra business finance to cover your remaining costs. Lendfin offers small business loans for both new and established businesses, so contact our specialists to see how we can help you get started today.