How to use your tax refund this
The word Spring means much more than just warmer weather.
In Spring, many Canadians receive a tax refund. Are you receiving one and what are you doing with the money? If you don’t have a plan, you may fritter it away, and the hundreds or thousands of dollars will be gone. You will wonder where it all went.
It doesn’t matter the amount of your tax refund. It could be $200 or $5,000. Do something with your refund that will make a difference.
Take your refund and divide it between these categories. In the summer, you will see the results from your efforts. S for Save Deposit some of your tax refund into your TFSA or RRSP, depending on your situation. If you are in a high tax bracket and received your refund because of an RRSP contribution, then put these dollars into your RRSP. Otherwise, contribute money towards your TFSA. This is the best account to put money aside. Funds can be used for emergencies, travel, a large purchase, down payment on a home, etc. TFSAs offer tax free growth. It is a great savings vehicle and investment account for Canadians. P for Pay off debt Statistics Canada says the amount of household debt is going up, way up. We are setting record high levels of debt. Even when Canadians are making more money every year, we are taking on more and more debt. If you are having a difficulty with your debt, hide your credit card for 3 weeks. For day-today purchases, use cash or a debit card. You may find this easier than you thought. It will make you think before buying. For larger items, get in the habit of saving the money then making the purchase. Anticipation is the best part of the process. This gives you time to do your research to make sure you are buying the right item, brand and price. R for Recreation; get moving Spend a dollars on a new activity, program or piece of fitness equipment. Enjoy the fourseason Okanagan playground! Walk through the parks, paddle on the lakes, explore the mountains or bike on the country roads and numerous trails. I for Insure Are you protected? This is a great place to put some of your tax refund. You may be very surprised on how little money is needed to fully protect you and your family. Do you earn an income? You may need disability or critical illness insurance. Do you have medical expenses? Then a health and dental plan may be able to help you with these expenses. Do you own a business with partners? Corporate insurance plans can protect you. N for Not for profit Local organizations need your help. Many are finding it difficult to make ends meet because of less funding. Now they depend more from donors. Your dollars are put to very good use to purchase food, provide clothing and shelter, buy new hospital equipment, give money for continued research and helping families with mental illness. G for Go for it Take a few dollars and do something crazy! Use your refund to save, pay off debt, register for an activity or buy something new for recreation, insure yourself, donate to a nonprofit organization and go for it. The amounts don’t count, it’s the action of doing Spring with your tax refund.
Lisa Jaffary is a life insurance agent and financial adviser with Points West Insurance Services in Kelowna. Reach her by email at lisa@pointswest.ca.