What To Do With Your Tax Refund

It’s tax time and for many lucky Canadians, that means a bit of extra cash that likely hasn’t been allocated yet. A lot of people will spend the money on a series of smaller frivolities, while others will set all of it aside in savings or investments. While I certainly wouldn’t discourage the second option, you might be hoping to have a little fun with that cash. So how do you find the right way to spend it?


Invest in Yourself

Investing your tax refund is always a good idea. Depending on your situation, that money might be put to good use in a retirement fund, emergency fund, or towards your kids’ education. There are a lot of great ways to invest in yourself and your future by saving that money so talk to a financial advisor.


Another way to invest in yourself is to put that tax windfall toward learning a new skill that could help you in your career. Upgrading your skills on a regular basis is important in today’s competitive job market and there are lots of resources to help you learn new skills. In fact, there are a number of online courses you can take at your own pace that can teach you valuable skills, such as coding. Websites such as lynda.com have made this type of education easily accessible to everyone, and hopefully enjoyable too!


Upgrade an Important Tool

Much like investing in yourself by learning a new skill, upgrading an important tool can be a good way to spend part of your tax return. For example, for many of us a personal computer is an important tool that we use to generate some or all of our income. If that computer is on its last leg or just isn’t allowing you to keep up with your industry, it might be time to consider a new one. The folks at your local Staples store can help you select a new one that will meet your needs.


If it’s not quite that dire but your computer could use a boost, an upgrade to a solid state drive, or SSD, might give you the performance improvement you’re looking for. If you don’t know much about solid state drives, I recommend reading up on the subject—this upgrade can make a huge difference to your system.


Have a Little Fun

Though it’s easy to forget, you worked hard for the income that’s being refunded at tax time. You deserve to have a little fun with that hard-earned cash! While it’s not advisable to spend it all on frivolous “stuff,” setting aside ten to twenty percent to treat yourself to something that brings you joy is a great way to spend some of that money.


For a lot of people, treating themselves comes in the form of a well-deserved break. Putting part of your tax refund toward a vacation is actually a way to invest in your well-being and even in your career. A break from work can serve to energize and focus you when you get back to work.


If a vacation isn’t in the cards, spring for something that will bring you joy over a longer span of time, rather than spending the money on a one-time high. For me, a new tech toy that I’ll use over and over is always a great way to spend a bit of my tax refund. For example, a new DSLR camera appeals to my inner techie while also allowing me to pursue a hobby I enjoy.


Regardless of how you end up allocating your tax refund, I recommend planning it in advance. Waiting until you receive the money can leave you open to making an impulse buy before you’ve had time to think through the best way to allocate the it.

By Mike Agerbo

March 24, 2015