If you’re expecting to get a tax refund this year, you’ll soon be blessed with a lump sum of cash, granted by your fairy-tax-godmother.
Now, before you spend it on that trip to Bali, or that new KKW Contour Palette, there might be a few money smart moves you can make instead.
1. Pay off high interest debt
Still got that credit card debt lingering around since Christmas? Well, there’s no better time to pay off some high interest debt, than when you’ve got a good chunk of cash to bring the total amount owing down.
Credit Card interest rates can be upwards of 19%. Meaning, this is just the kind of debt you want to get rid of…ASAP!
The debt-snowball method is a great way to start rolling out that CC debt, to never see it again!
2. Invest it
We all know you should have started investing yesterday, but if you still haven’t got around to it, now’s your chance.
Set up an investment account (could be an RRSP or a TFSA for all my Canadian gals), put down some cash and make a commitment to contribute on the regular.
Getting invested at an early age is so important for your finances. If you’re tight on money, your tax returns are a great way to start investing without having to flex on your already tight budget.
Invest now, and watch that paper grow.
3. Use it to start an emergency fund
One of the basic rules of money management is to set up an emergency fund. An emergency fund is pretty much a heap of cash worth 3 to 6 months of your living expenses.
Now, this isn’t your typical wad-of-cash-under-the-mattress type of fund, but rather – something to put away in a high interest savings account or even a low risk investment. As long as it’s liquid and easily accessible (in other words your money’s not locked in or invested in a volatile fund) – then you’re good.
But what’s the point of an emergency fund? Well, only to be used in case of an emergency (duh 😉 )! And, what’s an emergency, you ask? Well, that YSL cross body clutch ain’t an emergency, but getting laid off from your job definitely is.
