A new financial year is here, and for some of us, that means a juicy tax refund is coming our way. Here’s some inspiration for how you can spend yours.
1. Offset, redraw or mortgage overpayment
As interest rates creep up, many voiced plans to send their tax refund straight into their offset account, redraw facility or directly onto their mortgage. Getting a lump sum refund at tax time is a great opportunity to chew away at your mortgage balance and reduce the interest you’ll pay.
2. Top up an emergency fund
Another top use of your tax refund this year is to juice up your emergency fund. Several said they’d be increasing their ‘just in case’ buffer to account for rising costs or pending redundancy, or replenishing it following a large expense earlier in the year. There’s truly no greater feeling than a bigger safety net.
3. Superannuation contribution
Another savvy suggestion was making a voluntary contribution to your superfund. Getting ahead on your contributions for the next financial year could make all the difference in retirement – plus, you may be able to deduct the contribution on your next tax return so it’s like you’re double dipping. If you’re planning to buy your first home in the next few years, contributing to your super under the First Home Super Saver Scheme could be another neat use of your tax refund.
4. Big ticket purchases
A lump sum at the end of the financial year might give you the green light to finally snatch up a big ticket purchase you’ve been waiting for. Some of the people I spoke to cited headphones, an electric bike, a special rug, a new iPhone, and a new bed and mattress as purchases they’d be snapping up this July.
Some lucky folks planned to put their refunds towards upcoming travel, and with the cost of flights and accommodation soaring, it’s a great way to make the most of that cash injection. So if you’ve got your eyes on a getaway, your refund could see you escaping the winter chill sooner.
6. Clearing or repaying debt
Another popular avenue for tax refund spending was debt repayments. If you’ve got a credit card or loan balance on your mind, consider chucking some or all of your tax refund towards it. Not only will you slash any interest incurred, but you’ll make a big step towards clearing the debt for good.
7. Training or upskilling
One cash-savvy idea was to invest a tax refund into a training or upskilling course with the intention of snagging a higher salary. If you’ve been wanting to turn up the heat on your pay packet, developing a new skill could help you get a promotion.
8. Increase a self-employed or side hustle cash flow buffer
With the economy uncertain, some business owners and side hustlers shared that they’d be using their tax refund to bolster any potential cash flow struggles. If you also run your own gig then beefing up your cash reserves could be a smart use of your dollars, too.
9. The big split
Torn between a few uses for your tax refund? You don’t have to settle on just one. Several people expressed they’d be splitting their refund between a few different goals or priorities.
And most importantly, planning how to spend your tax refund in advance can really help manage mindless spending and ensure you’re getting the most out of your refund.