How to make the most of your tax return
February is a great time for everyone expecting a tax return.
What’s better than a lump sum payment from the government to counteract some of the massive deductions off of your paychecks over the last year?
While you may have been thinking about anything from a shopping spree to a down payment on a new car, I’d like to intervene to suggest some other, more financially sound ideas. Follow at your leisure.
Put it into your savings account
I know this is the most boring thing you could do with your tax return, but sometimes, boring is better. Saving throughout the year can be hard. Especially when you’re making other payments towards your car lease, your rent or mortgage, or your school tuition. Putting in a large sum at one time can help you hit your saving goals as well as remove some of the pressure to save something from your next few paychecks.
It's also good to keep important deadlines in mind, like the March 1 deadline for RRSP contributions.
Fix your car
Winter can do a number on our vehicles. The cost of winter tires, maintenance and oil changes can really add up, and I’m sure there are a few of us who skip suggested or mandatory auto care in the name of saving a few bucks.
But now that it’s tax time, perhaps we should give our cars the love they missed out on in the winter months. Talk to your mechanic about a spring tune up, see how to get the most bang for your buck and do the work that will keep your car going for as long as possible.
Invest in some self-care
Ideally, this investment would be a new wardrobe, a vacation, you know, things frivolous in nature. Luckily for you, it just might be.
Self-care is very much an investment, especially since studies show that there are major health benefits to self-care, such as a reduction in stress, better heart health and improvements to mental health.
If you’ve been on the grind for the last year and haven’t seen sand since dinosaurs roamed, you might be due for a vacation. BUT…before you book a Turks and Caicos all-inclusive on your credit card, think about how to do it on a budget. Consider skipping an all-inclusive and finding a cheap AirBnB, or visiting that cousin that you haven’t seen in forever to save some money on accommodations.
Believe it or not, vacations don’t have to be expensive. Don’t believe me? Check out my friend The Impatient Tourist. Give her your budget and desired location and she’ll create a custom itinerary for you in exchange for a small donation or social media review.
Invest in yourself
When I started my side hustle, Hinds Media Consulting, I realized how fast the expenses of running a business can add up. For instance, the volume of work that I was doing was quickly outpacing the abilities of my six-year-old computer. Would I need a new one? Eventually. Right now? Absolutely not. So I'm saving towards a new computer.
This is an investment. It's me spending money right now in order to maintain my income and hopefully earn more in the future. The same way that school costs a truckload of money at first, and promises (kind of) that we will get a bigger return on the investment of our tuition after we graduate and find jobs in our respective fields.
Lastly, if none of these options suit you, and if your return permits, do a bit of each. Put a little away for savings, whether this is a couple dollars or a couple hundred, anything counts! If you need a few things done to your car, just do the most important. If you'd like a mani-pedi at your favourite salon, go for it! And if you need some new business cards, make the purchase. Whatever you do, make sure you do with your tax return what's best for you.