The new financial year has arrived and there's probably one thing on your mind: Getting your tax return done on time. And why wouldn't you? Doing a return could give a nice boost to your savings account.
"Australians expect to get back $2,370 from their tax return in this financial year, a significant increase in expectation to last year's result," said Shawn Blackmore, AustralianSuper group executive of service and advice.
This amount could be a significant windfall for your finances. But resist the urge to simply put all of it into your savings account or spend it frivolously – there are other ways to more prudently make use of your hard-earned tax dollars.
Pay down your debt
Whether it's a student loan, credit cards or that personal loan you got to buy a new speaker system, your debt ratio could probably do with a bit of fixing up. So why not use your newly-acquired tax dollars to lighten some of the debt you're dragging along? It can benefit you in the long run by improving your credit history.
Add to your emergency fund
Perhaps you've been living hand to mouth for the last little while, spending your paycheques on the necessities and using the rest for daily life. Maybe you're still young and you're not thinking about health or other risks. But this attitude only lasts until the unexpected hits you – so start preparing now. Use the return as a foundation for which to build an emergency fund you can draw on when the unthinkable happens – a car accident that writes off your vehicle, for instance. You can then avoid getting a costly loan or turning to credit cards.
Let it grow
You could put away the money into an ordinary savings account and forget about it. Or, you could put it into a high-interest savings account and watch as your savings rapidly accrue. There are numerous options. You could go with a term deposit account, or you could open a stricter, but potentially more lucrative, bonus interest account. The choice is yours.
Make an investment
There are a number of places you could invest your return. You could buy shares or invest in property – there are a lot of options! Depending on the amount of savings you have to add to your refund, you could also find willing partners to enter into a mutual fund with you. Just remember to explore your options so you can make an informed decision.
Receive the gift of giving
Your return doesn't necessarily have to benefit only you. If you're relatively financially secure, giving to a charity is a productive and worthwhile way to spend it. Of course, you'll get a gift of more than just the good feeling of philanthropy – charitable donations are tax deductible.