While it’s tempting to run out and spend your tax return funds on a holiday or a new Sea-Doo, incorporating the money into a broader financial plan can go a long way.
More than half (57 per cent) of Canadians expect to receive a tax refund this year, and 61 per cent expecting a return believe it will be as much as $1,499, according to a new TD survey of 6,337 Canadians over the age of 18.
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It’s best to determine where you are in you life and what smart money move will best benefit you moving forward.
“There are many ways to use your tax refund based on the priorities you face in your life stage, like getting ready to buy a home, planning to expand your family or saving for retirement,” Linda MacKay, senior vice president of personal savings and investing at TD Canada Trust says in the survey’s release.
Take a look at your short- and long-term goals to see where your tax return will get the best bang for the buck.
“While you can spread it across several different financial priorities, you can also consider allocating the full sum towards one or two goals to fully maximize the return’s potential.”
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While you’re fresh out of school or eyeing retirement, TD offers up some some basic recommendations for different life stages.
Fresh out of school? Consider throwing a large chunk of money toward a student loan or line of credit. Or, start saving for a holiday while you bank vacation time at your new job.
Don’t have nagging bills? Look into investing as much as possible into any programs your employer offers such as an employee share purchase program or RSP matching contribution program.
Invest in yourself. Take a professional development course and set yourself on a path to that higher pay grade.
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The property pursuer:
Put the money toward the cost of buying your first home, a cottage or make a lump sum payment on your mortgage.
Stash the money away for a rainy day… and leaky roof.
The full house:
Little rascals running around? Consider contributing to your child’s RESP and watch the money grow over the years.
If there’s a bun in the oven, or will be soon, plan ahead and save up for a parental leave.
Buy RSPs now and get a head start on 2016’s contributions.
Put money aside for any anticipated bucket list hobbies or goals you have for your retirement.
Starting a new chapter:
A new career or relationship can sometimes bring with it uncertainty, or some growing pains. Put that cash into a high-interest savings account or TFSA to give yourself some financial —; and mental —; breathing room.